Dirk Steffen, our Chief Investment Officer EMEA and Global Chief Investment Strategist, discusses recent inflation prints, elaborates on European assets after elections and comments on the Q2 earnings season.
Inflation data from the US came in slightly lower than expected which caused quite a bit of rotation. "Everybody's darlings - the megacaps and growth stocks - underperformed significantly while small-cap stocks, represented by the Russell 2000, outperformed," says Dirk.
Commenting on elections in Europe, Dirk says: "While politics usually impact capital markets just for a short period of time, this time, these effects could last a bit longer." But there's good news: "Fundamentally speaking, European stock markets look quite attractive as we have a turning economy which provides better growth" adding that "this comes at a price that is at a record low versus U.S. equities."
Finally, earnings season just kicked off and although the extended technology industry is still doing very well, growth rates (albeit strong) are coming down. Dirk sees "other sectors coming back and we're getting to a market which is more balanced, leading to an overall healthier market environment."
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Weekly Investment Outlook: July 8, 2024 – Earnings season kicks off
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Global Chief Investment Officer, Christian Nolting, set the stage for the 2nd-quarter earnings season which is about to begin – and reflected on what that could mean for equities. “Earnings expectations are very high, and that needs confirmation,” Christian said. “But in general, we do expect a very solid earnings season.” He also explained why investors might want to look at small- and mid-cap stocks in the coming quarters.
U.S. inflation figures are due in the coming week, and Christian said that it could take some time for prices rises to come down to the Federal Reserve’s target. But he said an interest-rate cut this year remains a possibility.
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Weekly Investment Outlook: July 1, 2024 – A view on the AI boom
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer for Europe, Middle East and Africa, Dr. Dirk Steffen, took a historical view to evaluate this year’s surge, and recent volatility, in megacap technology stocks. “We have to have that discussion”, Dirk said. “But we don’t think that we are already in bubble territory.”
Politics entered the conversation, as investors turn to focus on elections in France and the U.K. and consider the implications. In the week ahead, Dirk noted that markets will also be focused on U.S. jobs data on Friday for a view of the state of the economy, and also for the potential impact on Federal Reserve interest-rate policy – particularly after last week’s softening inflation data.
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Weekly Investment Outlook: June 24, 2024 – FX in the shadow of rates
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer in APAC, Stefanie Holtze-Jen puts inflation data and FX under the lens, and discusses recent key moves in JPY, AUD, CNY, EUR, and CHF.
Stefanie says the Swiss Franc (CHF) strengthened as a safe haven ahead of France’s election this weekend, giving the Swiss Central Bank reason for a surprise rate cut.
In the Asia Pacific region, Stefanie says this week’s inflation data could trigger the Bank of Japan to hike rates in July, which could put a lid on depreciation of the Yen which is approaching 159JPY/USD.
Stefanie explains the gradual weakening of China’s Renminbi (RMB), pointing to pressure from Japan’s export orientated Yen, and the stronger US dollar which is backed by rates higher for longer.
In Australia, while the RBA held rates steady in the latest meeting, watch for new inflation data this week which could suggest another hike may be on the way.
Coming up in the US, personal spending, GDP, and PCE data will give a better sense of the US macro backdrop and rates outlook.
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Weekly Investment Outlook: June 17, 2024 – The economy and stocks: rising forecasts
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer for the Americas, Deepak Puri, reflects on the outlook for interest rates, and a variety of assets, in light of receding price pressures. "We've started to see this disinflation traction that the Fed has been asking for", he says.
The Private Bank also had its quarterly CIO Day, which yielded some positive updates on forecasts for the economy. "We have upgraded slightly the global growth scenario both for this year and for next", Deepak says.
In the week ahead, Deepak says he will be watching for data on U.S. retail sales for a view of "how consumers are feeling". Central bank policy decisions are also expected in the U.K., Switzerland, and Australia.
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Weekly Investment Outlook: June 10, 2024 – ECB pivots, Fed decision awaits
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer for Europe, Middle East and Africa, Dr. Dirk Steffen, considers the outlook for the European economy and European stocks after the ECB's decision to get ahead of the Federal Reserve and begin to bring rates down.
Dirk says that the rate cut doesn't mean the ECB will move quickly. "It will be a small and smooth and cautious cycle", Dirk says. "And that essentially means that here we are dealing with higher-for-longer rates, or relatively elevated rates. And this is in our view actually quite positive for the markets."
In the week to come, the Federal Reserve’s policy decision will be on investors' radar, along with a fresh reading of the inflation picture in the U.S. And markets are still digesting critical elections in India and Mexico.
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Weekly Investment Outlook: June 3, 2024 – E&CB – Elections & Central Banks
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer in APAC, Stefanie Holtze-Jen, discusses softer U.S. GDP data, EU inflation and central bank signals in the U.S., EU, Japan, India and China.
In the U.S., nonfarm payroll data will be closely watched, and on Thursday the ECB is widely expected to cut rates by 25 basis points. Stefanie says it will be important to closely monitor the communications from the ECB press conference for signals about future policy.
In Asia, India’s election and China and Japan’s currencies are also in focus. Stefanie discusses different modes of central bank currency intervention as both these Asian giants battle weak currencies.
Tune in and listen to Stefanie’s key thoughts for the week ahead.
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Weekly Investment Outlook: May 27, 2024 – Cut ahead – at least in Europe
In this week's Investment Outlook podcast, Global Chief Investment Officer Christian Nolting shares his quick takes on the earnings season, the Federal Reserve's meeting minutes, and what recent data tell us about the Eurozone economy.
The focus on price pressures in the Fed minutes mean that "if inflation would start to pick up, the Fed probably would have to hike rates", he said. But Christian still expects the Fed to begin lowering rates in the second half of the year. Looking at the ECB, he anticipates a rate cut in June, and says "everything else would be a massive surprise".
Finally, Christian elaborates on the price jumps of both copper and gold this year. "The current inflationary environment of 2-4% is a nice environment for gold", he says. But even as prices pressures ease, industrial metals like copper could continue to benefit, as "there's more demand for infrastructure, such as data centres".
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Weekly Investment Outlook: May 20, 2024 – Goldilocks ahead?
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Strategist and CIO for EMEA, Dirk Steffen, considers a mixed bag of economic data out of China and what it could mean for the country's equities – which have only recently returned to bull-market territory.
Looking to the U.S., Dirk reflects on the latest inflation figures and sees a bright spot: "That's actually giving the Fed some flexibility" on coming policy decisions. Corporate earnings however will remain the main driver for stocks, he says, and a solid second quarter in Europe offers potential for further positive momentum in the region.
The U.S. central bank will again be in the spotlight in the week ahead when the Federal Reserve releases the minutes from its recent meeting, though investors will have a wealth of economic data to consider as well.
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Weekly Investment Outlook: May 13, 2024 – All eyes on U.S. economic data
In this week's Investment Outlook podcast, Deepak Puri, our Chief Investment Officer for the Americas, summarises the market developments and says: “After a disappointing April, May started on a stronger footing – much of this is due to the Fed meeting on May 1st."
As the first quarter earnings season draws to a close, Deepak also shares his assessment of the performance and outlook, sharing that the season has been "one of the silver linings" of the year so far. Earnings growth came in better than expected, while the Discretionary, Communication Services and Technology sectors remain the biggest drivers.
After a weaker week of economic releases, this week will be one to watch closely: with the upcoming release of the Consumer Price Index and retail sales reflecting consumer strength, we will see some data points that have the potential to steer the next Fed interest rates decision.
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Weekly Investment Outlook: May 6, 2024 – Action in Asia
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer in APAC, Stefanie Holtze-Jen, discusses the message from Federal Reserve Chair Jay Powell for markets.
Stefanie also discusses key developments in Asia including intervention for the Japanese Yen, and drivers of Japanese equities.
Shedding light on Greater China developments, Stefanie points to the steps from China’s CSRC that aims to encourage more mainland IPOs to list in Hong Kong, which is contributing to the Hang Seng reaching new highs.
To coincide with the Private Bank hosting its first Emerging Market Family Office Forum in Singapore, Stefanie also highlights our latest CIO special report examining the country's medium-term outlook and its family office ecosystem.
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Weekly Investment Outlook: April 29, 2024 – Earnings strength, Fed in focus
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Chief Investment Officer for Europe, Middle East and Africa, Dr. Dirk Steffen, talks about the recent wave of expectation-beating corporate earnings reports, and discusses other signs that the U.S. economy is holding strong, despite first-quarter GDP coming in below forecasts.
For the week ahead, all eyes will be on the Federal Reserve’s policy decision on Wednesday, along with another group of corporate results, and Dirk says that lower interest rates from the Fed are likely to arrive only “when the U.S. economy is slowing somewhat more.” The monthly U.S. jobs report will also be in the spotlight on Friday.
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Weekly Investment Outlook: April 22, 2024 – Quality prevails
In this week’s CIO Weekly Investment Outlook podcast, the Private Bank’s Global Chief Investment Officer, Christian Nolting, considers recent developments regarding the conflict within the Middle East, and reflects on the potential impacts for investors and a variety of asset classes.
For the week ahead, corporate earnings are at the top of the agenda, and Christian says investors “need to focus on quality”. U.S. tech firms are due to report, and the spotlight will be on how they perform in light of high expectations, particularly as the sector has been a big driver for recent gains.
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