Current market commentary
The constant back and forth of investment styles continues. Recently, growth companies were once again ahead. Shares from healthcare and technology sectors in particular were able to make stronger gains. Value stocks, on the other hand, were weighed down by Covid-19 fears around the Delta variant as well as falling bond yields. Style volatility is likely to persist for some time, helped by mixed economic and inflation data. In addition, positioning is no longer as pronounced in one direction or the other. The equity market as a whole is currently supported by ongoing inflows as well as a build-up of risk positions on the part of systematic investors. Price momentum is positive for many equity regions and volatility has continued to fall. The VIX is at its lowest level since February 2020, but as equity markets have already priced in a lot of positivity, we see limited upside potential until the end of the year. Consequently, we are only slightly overweight equities.
The Q2 reporting season will determine stock market activity. With the key figures of the major US banks next week, the reporting season picks up speed. For the S&P 500, the market expects Q2 earnings growth of more than 60% year-on-year. The G20 meeting this weekend is expected to drive the global tax debate, which is likely to affect a number of multinationals. US stock markets are closed today (for US bank holidays). Tomorrow, Germany's new orders (May) and ZEW economic sentiment (July) are due, as well as the US services ISM (June). This will be followed by Germany's industrial production data (May) on Wednesday and exports (May) on Thursday. Industrial production (May) for France, Italy and the UK as well as inflation data (June) for China will be published on Friday. In the following week, industrial production data and retail sales data will be released for both the USA and China.