Stock markets remain unpredictable

Economics

• Two big shocks: Putin's invasion of Ukraine weighs on the economy, China's Zero-Covid policy disrupts global trade.
• Eurozone remains in stagflation until mid-year. US economy loses momentum.
• A recession in Europe and the US is not excluded, but unlikely. The US Fed does not want a recession.

Equities

• After the recovery in March, the equity sell-off continued in April. Growth stocks were particularly burdened.
• Investors are struggling with a plethora of risks. Already cautious investor positioning should prevent sharp sell-off.
• We have used the recovery rally to reduce our equity exposure to neutral. Outlook remains uncertain.

Bonds

• Global bond markets are under pressure due to rising interest rates and inflation concerns. Yield levels are increasingly attractive.
• Corporate bonds and emerging market bonds are weighed down by Putin's war and recession fears.
• We are underweight bonds and favour emerging market bonds. Duration: neutral.

Commodities

• Gold lost ground on a strong dollar. Recession worries and high inflation versus rising real interest rates balance each other out.
• Oil market with high volatility. The start of the oil embargo and a recovery in demand from China should provide a tailwind.
• Decarbonisation is long term driver for industrial metals. Slump in demand from China and recession fears are temporary burden.

Currencies

• The US dollar is benefiting from its role as a safe haven and from the tighter monetary policy of the US Federal Reserve.
• In contrast, the euro is suffering from the ECB's hesitancy. The EUR/USD exchange rate has fallen to around 1.05.
• The euro was able to gain against the pound. The British currency was too strong and has now corrected.