Summer trend 2021: Sideways

The rally phase of the first third of the year is likely to be replaced by a sideways trend in the summer. Moderate inflation could support equities and real assets. The investment regions of the USA and Europe remain interesting. And commodities and gold are also gaining in attractiveness again.

The authors

DJE's team of analysts monitors and evaluates the markets on an ongoing basis using the in-house FMM method according to fundamental, monetary and market criteria. They summarise their findings once a month.

From the analyst team of DJE Kapital AG

After the very good performance of the stock markets in the first four months of 2021, we expect equity markets to initially move indecisively or sideways over the summer. Our sentiment indicator, the market technicals, is currently tense and there are fundamental headwinds, which are expressed in the debates about tax increases and stronger regulations in the US. However, we do not expect massive selling pressure according to the stock market adage "Sell in May and go away" or even a bear market.

The development of inflation expectations must be closely monitored: They are likely to continue to rise for the time being. However, as long as the enormous monetary tailwind continues - which we assume for the time being - and the central banks do not take massive countermeasures, a somewhat higher inflation could even be more favourable for the stock market or real assets in general. In autumn, after the expected sideways movement, there could be a clear upward trend again.

Regionally, we still consider Europe and the USA more attractive than the emerging markets. The latter, however, could outperform the broad market again by the end of the year if the burden of the corona pandemic decreases - a high level of contagion should soon be reached in Brazil or India, for example. Within Europe, we currently consider the UK to be interesting. After years of difficult economic development, things could soon start to look up again.



  • Debate on tax increases negative
  • Tax increases, however, generally only a short-term burden

Tax increases are most likely in the US in the medium term, the question is how much. US Treasury Secretary Janet Yellen, for example, wants to push through stronger tax increases. Theoretically, the expected tax increase could weigh on future S&P 500 earnings by up to 10%. In our view, the tax debate is largely neutral for markets: Previous tax hikes have typically depressed the stock market only briefly.



  • Further rise in inflation expectations
  • Moderately higher inflation positive for equity markets

Many market participants and companies fear increasing pressure on input prices, mainly due to tight global supply chains. The pressure on inflation rates will therefore remain for the time being. However, many cyclicals and companies with high pricing power1 tend to benefit from rising raw material prices and the tight availability of goods.


In the past, wage developments have always been the most important factor influencing long-term inflation trends. However, rising wages are not in sight. Against the background of relatively high unemployment rates, they are not likely either. The bond markets, on the other hand, are likely to remain under pressure for the time being. We are therefore maintaining our short duration. We do not expect galloping inflation - as feared by some. Slightly higher inflation could even stimulate the equity market. Real assets are likely to remain in demand.


Market technical

  • Market participants overly optimistic
  • Tense situation remains

"Sell in May and go away" is being hotly debated at many major US banks. The market technique also remains tense, meaning that optimism is dangerously high in some cases. If this is the case, even minor disappointments can trigger a correction. The pressure on the markets from this side remains for the time being. For example, the sentiment indicator NAIIM Exposure Index2 is currently at 104%, and in this constellation it does not usually go much higher.



  • Balanced portfolios advantageous
  • No overweight in Asia and emerging markets

The Asian investment region is generally not as well supported monetarily as the US or Europe. In China, excess liquidity continues to decline. Other emerging markets such as India or Brazil are still heavily burdened by Corona. An improvement is only in sight here towards the end of the year. Larger overweights in Asia or the emerging markets should be reduced. In our opinion, caution is also advisable in sub-sectors of the real estate market: here, there could well be higher taxation of owners in the future, and in markets such as Germany, political headwinds are also to be expected. 


  • Euro neutral against US dollar
  • Commodities and gold positive

After the recent euro recovery, we currently have a largely neutral view on the USD/EUR exchange rate. We remain positive on the commodity sector. Here, continued high demand meets limited supply. We are also now more positive again on gold and gold mining stocks. In the case of gold in particular, the market technique is currently clearly positive.



1             Companies with high pricing power are those with strong brands, such as the iPhone giant Apple, or those that have occupied a strong market position, such as the software manufacturer Microsoft or the online retail giant Amazon.

2             NAAIM = National Association of Active Investment Managers. The NAAIM Exposure Index tracks the average exposure of its members to the US equity markets.

The NAAIM Index is not forward-looking, but provides insight into the actual adjustments that active risk managers have made to client accounts over the past two weeks.


Note: All information published is for your information only and does not constitute investment advice or other recommendation. Long-term experience and awards do not guarantee investment success. Securities are subject to market-related price fluctuations which may not be compensated for by the active management of the asset manager or investment advisor. This information cannot replace a consultation. All information has been provided with care and to the best of our knowledge at the time of preparation. Despite all due care, the data may have changed in the meantime. Further information on opportunities and risks can be found on the website The sales prospectus and further information are available free of charge in German from DJE Investment S.A. or at The fund management company is DJE Investment S.A. DJE Kapital AG is the distribution agent.