The authors: DJE's strategy team monitors and evaluates the markets on an ongoing basis using the in-house FMM method according to fundamental, monetary and market technology criteria.
Looking ahead to July 2025, we are generally constructive. From a seasonal perspective, July is usually a good month. However, caution is advised if, contrary to expectations, no agreement is reached in the tariff dispute between the EU and the US or between the US and Japan. If the trade conflict escalates here, a market correction is to be expected.
The upcoming Q2 reporting season could already be characterized by stronger influences on the currency side. Internationally positioned US companies are benefiting from the weakness of the US dollar, whereas European companies with greater US dollar exposure are not. In general, expectations do not appear to be too high, and the potential for surprises is greater for US companies than for European ones. Another positive aspect is that economic policy uncertainty in the USA is receding or decreasing. In the past, such phases have usually been positive for the markets.
The US Federal Reserve is not expected to cut interest rates over the summer. In September, however, a rate cut is likely. Phases of moderate interest rate cuts in the absence of a recession have been good phases for the US stock market in the past. Artificial intelligence remains one of the main growth drivers of the US economy. By contrast, the situation in the consumer sector is much more difficult. Regionally, selected emerging markets remain interesting.
Opportunities that we see:
Emerging markets remain selectively attractive: Emerging markets (EMs) are generally benefiting from a weaker US dollar. India is lowering interest rates, is little affected by US customs policy and many companies are reporting good business performance. For China, the increased fiscal policy stimulus from the government is positive, which is now taking on more debt (record government debt in 2025). Many emerging economies are self-confident in the tariff conflict and are aware of their strong position.
Technology sector attractive: Among the more offensive sectors, technology, especially in the areas of artificial intelligence and software, continues to appear interesting.
Infrastructure remains a long-term issue: Government and corporate spending on infrastructure - especially in the energy sector - remains high, regardless of the customs conflict. Well-positioned companies benefit from this.
The peak of the tariff burdens may be behind us: The experiences and turbulence of recent weeks, the worsened economic outlook and lower approval ratings should prevent Donald Trump from escalating the tariff dispute further.
US Policy Uncertainty Index falls: In the past, this was usually a positive signal for the markets.
Risks that we observe:
No agreement in the tariff dispute with the EU and Japan: If there is no agreement in the tariff dispute between the US and the EU in July (deadline on July 9), this could weigh more heavily on the markets.
Customs consequences for corporate profits underestimated: The negative effects of the erratic US customs policy could impact the earnings performance of various sectors with a time lag (late summer/autumn). These risks do not appear to have been priced in so far.
Consumer sector: There are signs of a recession in the consumer sector in the USA.
Automotive sector (Europe/Western world): The market shares of Western manufacturers in China will continue to fall, as they do not appear to be competitive with Chinese manufacturers when it comes to electric cars.
European companies with a high US dollar exposure may be more affected by the weakness of the US currency. From a very long-term perspective, it is striking that European equities (based on the Euro Stoxx 50) have still not overcome the high from the year 2000. From a technical perspective, it would be very important for European equities to overcome this resistance.
Marketing advert: All information published here is for your information only and does not constitute investment advice or any other recommendation. The statements contained in this document reflect the current assessment of DJE Kapital AG. These may change at any time without prior notice. All statements made have been made with care in accordance with the state of knowledge at the time of preparation. However, no guarantee and no liability can be assumed for the accuracy and completeness of the information.