The leading economic indicators painted a chiaroscuro picture in August. The US central bank (Fed) remained unmoved and stuck to its restrictive monetary policy. This combination triggered quite a rollercoaster ride for stock markets. Our basis scenario is still unchanged: we remain overweight in equities.

The leading economic indicators are painting both a light and dark picture. The US central bank (Fed) is sitting on its hands for now and has confirmed its existing pathway of restrictive monetary policy. This constellation is weighing on equities. US technology stocks are leading the global equities sell-off. Government bonds are appreciating strongly. Our basis scenario remains unchanged.

The first half of 2024 delivered solid returns for equity investors in particular. For bond investments, rising interest rates were a mixed blessing. US technology stocks continued to dominate global equity markets.

The attention of the investment community is gradually turning to the US elections. The first TV debate confirmed existing expectations of the quality of the candidates. Away from the cameras, rates of inflation continue to develop constructively. Both equities and bonds have benefited from this development. Swiss investors have experienced something of a headwind given the stronger Swiss franc.

Equity markets were in the spotlight in the first quarter. Headwinds picked up a little towards the end. But despite some evidence of weakening, the economic data coming from the US has remained encouraging in recent weeks. Here in Europe, a process of normalisation is apparent. We therefore expect the growth environment to remain constructive with declining rates of inflation. What does this mean for the equity markets?

Equity markets consolidated over the summer months. The prospect of an economic downturn gave rise to uncertainty. Capital market interest rates barely declined, despite perceptible concerns over the development of the economy and lower rates of inflation. In the US, interest rates actually rose significantly. This environment opens up investment opportunities.

US technology stocks have soared in recent weeks. By contrast, equity markets as a whole have trended sideways. The focus now is on the increasingly pronounced economic downturn and its impact on companies. Inflation rates are still too high, central banks remain hawkish.

The last two months have been characterised by solid company results, a healthy labour market and stable consumer spending. Equity markets have recovered. And now US inflation data for October has supplied a further dose of good news.