At a glance
Economics
- Putin’s invasion of Ukraine weighs on the economy. Europe is hit much harder than the US.
- Higher prices for energy, food and raw materials are causing an inflation shock.
- In the course of the year, the economy should recover from the shock and growth should return.
Equities
- Russia-Ukraine war triggers significant sell-off in equities. Cyclical equities are heavily weighed down by stagflation concerns.
- Equity regions with many commodity companies are at an advantage. Strong pessimism offers opportunities for recovery.
- Asymmetric risk-reward ratio favours equities, which is why we are maintaining our moderate overweight.
Bonds
- Safe haven government bonds have benefited. The geopolitical crisis does not change our medium-term interest rate outlook.
- Corporate bonds are increasingly attractive due to widening spreads and rising interest rates. Opportunities are on the horizon.
- We are underweight bonds and remain overweight corporate bonds; duration: short.
Commodities
- Gold benefited as a safe haven. Possible headwind from real interest rates only moderate with simultaneously rising interest rates.
- Supply shortage drives oil price up. Further sanctions and supply cuts by Russia provide upward pressure.
- Industrial metals are supported by high oil prices and supply concerns. Decarbonisation accelerates as a long-term driver.
Currencies
- The Russia-Ukraine war is driving investors into safe havens. The US dollar, Swiss franc and yen are benefitting.
- These are difficult times for the euro – the regional proximity to the Ukraine-Russia war is a relative burdening factor.
- The Bank of England’s interest rate turnaround marches ahead. The British pound continues to strive upwards.
