News
Key industry for decarbonisation
Commodities have fared better in the past. But since the beginning of 2022, it seems, the worm has been in the wind. Production, profits and revenues of mining companies are falling, only costs are rising. But the sector is consolidating and a bottom is in sight. Moreover, the current mine supply cannot meet demand for some metals. This applies first and foremost to the key metal of decarbonisation: copper.
Ahead with caution
Looking ahead to May and the months ahead, DJE's strategy team believes that a higher level of caution is justified. While interest rates should not rise further, interest rate levels are likely to remain high for longer than the market expects. Moreover, the delays with which tighter monetary policy will take effect have not yet been priced in.
Calm markets await central banks
April was a fairly calm month on the stock and bond markets, which was completely different from the quite volatile previous month due to the bank quake. Many market participants acted cautiously and waited for the central banks and their interest rate decisions at the beginning of May.
Cloud Computing – renting instead of (self-)making
In retrospect, 2006 was a decisive year for online retailing: the industry giant Amazon opened up its IT infrastructure, which until then had been used exclusively by itself, to other retailers and companies as a service. These "Amazon Web Services" include a broad range of different technical solutions that can be booked and cancelled according to individual needs. „Cloud computing" developed from this. In the following analysis, investors will learn about the complexity behind it, the opportunities that arise from it and which companies currently dominate the market.
Positive momentum
Sentiment is currently supporting the stock markets: investor optimism is not too high and the seasonal rhythm is providing a tailwind. In addition, the probability of another interest rate step in the USA has decreased. Beyond that, however, there are warning signals, for example a shrinking money supply and poorer lending on the part of banks.
Bank quake lowers interest rate expectations
Until mid-March, the markets expected further large interest rate hikes by the US Federal Reserve, as overall inflation fell but core inflation rose or stagnated. With the bankruptcy of SVB and the takeover of Credit Suisse by UBS, interest rate expectations fell, which supported the stock markets in a very volatile month.
Liquidity becomes more precious
The bankruptcy of Silicon Valley Bank and the emergency takeover of the major Swiss bank Credit Suisse by its even larger rival UBS have unsettled the markets. While a broad banking crisis is unlikely, other consequences, such as for liquidity and credit, are foreseeable. DJE's banking analyst and fund manager Moritz Rehmann explains how DJE is dealing with the issue.
Interest rates likely to stay higher for longer
After a differentiated analysis of inflation and its influencing factors, we expect core inflation to remain high for the time being and interest rates at a level that is likely to remain higher for a longer period of time. The banking and insurance sectors could benefit from this.
Rising core inflation causes unrest
After the strong start to the year in January 2023, the global markets largely moved sideways overall in February. In particular, rising core inflation excluding the components of energy and food worried the stock markets because this also raised interest rate expectations again.
Buoyant start to the year
Declining inflation rates and China's departure from its "zero-covid strategy" made market participants confident on both the equity and bond markets in January.
Light at the end of the tunnel?
With inflation easing, a recovery of German equitites of the residential real estate sector is possible. Certainly, the interest rate turnaround at the ECB will still take time, but the increase of key interest rates are beginning to take effect. The easing of energy costs is also having a supportive effect. In this environment a 30 percent correction of real estate prices anticipated by the market seems exaggerated, especially as the housing shortage continues to worsen. New construction should remain at a very low level in the coming years, while the influx of refugees from Ukraine is continuing at record levels.
First half year expected to be better
Lower energy prices are currently having a moderating effect on inflation, and China's departure from the zero-covid strategy is providing relief in the markets, but especially among China's major trading partners. Thus, the first half of 2023 could turn out better than many expect. However, if core inflation (excluding energy and food) does not fall as well, policy rates are also unlikely to fall as quickly as many are hoping, and the second half of the year may be worse than the first.
Unsettled end of the year
Both the stock and bond markets came under pressure again in December. Rising key interest rates in the USA and the euro area depressed prices on the stock exchanges and caused bond yields to rise further. In addition, the abrupt departure from the zero-covid strategy in China surprised the majority of market participants.
The comeback of bonds
For a long time, the asset class of bonds enjoyed great popularity among professional and private investors due to its broad stability and not infrequently served as risk mitigation and diversification in portfolios. However, inflation and rising market interest rates triggered a broad sell-off in the bond market this year, abruptly ending a bull market that had lasted for three decades.
Falling inflation provides relief
The stock markets were also able to recover in November. The main source of relief was lower inflation on both sides of the Atlantic. As a result, the markets expected less aggressive interest rate hikes by the central banks.
We look for structural winners in the niche
With the DJE - Mittelstand & Innovation, DJE bundles high-growth and innovative companies from Germany, Austria and Switzerland in one fund. Its concentrated portfolio includes many of the "hidden champions" from this region, which has recently been somewhat out of investors' focus, but whose strong Mittelstand companies are still worth a close look.
Renewable energies with opportunities
Even though the stock markets recovered in October because inflation in the USA declined and the energy crisis in Europe eased temporarily, the global economy is likely to remain under pressure in November and the coming months. It remains important for companies to keep an eye on their cost structure. Opportunities could arise in renewable energies.
Unexpected heights
Market participants' hopes for a less aggressive monetary policy by central banks and a warm October, which caused the price of gas to drop significantly, caused stock markets in the USA and Europe to soar. In addition, the German economy did not shrink as expected in the third quarter, but expanded, which gave the DAX an additional boost.
Between recession and structural growth drivers Summary
With a recession looming, a short-term downturn in the semiconductor industry is probable, but this is unlikely to have much impact on structural trends as these trends are long-term drivers. Various forces are currently affecting the semiconductor industry, whose products are indispensable in many parts of the global economy. This situation is complicated: An improvement in supply chain problems meets recession concerns, and global tensions, particularly between the U.S. and China, are creating uncertainty. What investors should know now.
Reduce equity risks - exploit selective opportunities
Inflation, rising interest rates, hawkish central banks and ongoing energy crisis in Europe sent the stock markets into the basement in September. In October we expect a short-term recovery on the markets.