Investors have used even small setbacks as buying opportunities

Im zweiwöchentlichen Monitor geben wir Ihnen einen strukturierten Überblick über die aktuelle Kapitalmarktlage und beleuchten wichtige Entwicklungen.

Current market commentary

While little has happened with shares at an index level, there has been a lot of movement below the surface. While growth stocks recovered strongly in April, highly valued IT stocks have recently fallen sharply. Strong economic data, inflation concerns and now increasing discussions about central bank tapering have revived the reflation trade. Energy companies and basic materials were among the relative winners. Equity regions that benefited were Latin America, Eastern Europe and the UK. But defensive sectors such as telecoms and consumer staples also gained. In our view, style volatility is likely to remain elevated over the next few weeks. The market continues to react strongly in the short term to hints of changes in Fed policy. When US Treasury Secretary Yellen last week only raised the possibility of rising interest rates, the Nasdaq fell sharply. A little later, she clarified her statements. The Nasdaq recovered. The topic remains sensitive for markets.

Short-term outlook

The Q1 reporting season in the US comes to an end in the next few weeks. More than 80% of the S&P 500 companies have already reported and on average both earnings and sales have surprised positively. The same applies for the Stoxx Europe 600. On the political and monetary policy front, the US tax debate, the US infrastructure programme and the increasing easing in Europe on Corona restrictions are likely to keep markets busy.

This Tuesday, ZEW Economic Sentiment data for Germany and Industrial Production data (Mar.) for Italy are due. This will be followed on Wednesday by Q1 GDP growth and industrial production data (Mar.) for the UK and consumer price data (Apr.) for the US. US retail sales (Apr.), industrial production data (Apr.) and consumer confidence (Uni Michigan, Apr.) will be released on Friday. Next week, the Markit Purchasing Managers' Indices from Europe and the US for May will follow.