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-technical criteria.
US tariff policy as a risk,
Emerging markets as an opportunity?
"Sell in May" would clearly have been the wrong advice this year: May was the best in 35 years. At sector level, technology and industrial stocks were in particular demand worldwide, while pharmaceutical and healthcare stocks were disappointing. In Europe, the leisure & travel and banking sectors led the way - healthcare and consumer goods also suffered here.
We expect the global equity markets to move sideways in June. The pending breakthrough in the tariff negotiations between the USA and the EU remains a risk factor. An import duty of 20% on EU goods could have a noticeable negative impact on European indices. The US Federal Reserve is unlikely to cut interest rates over the summer, as the economy is still too robust and economic development in the coming months is subject to considerable uncertainty. In the medium term, however, the easing pressure of rental prices on the core inflation rate could increase the scope for US interest rate cuts. 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:
The peak of tariff burdens should be behind us: the experiences and turbulence of recent weeks, the deteriorating economic outlook and lower approval ratings should prevent Donald Trump from escalating the tariff dispute further. If better-than-expected trade agreements are reached with China and the EU and there is no recession in the US, this would be positive for the markets. Historically, phases of moderate interest rate cuts in the absence of a recession in the US have been good stock market phases.
Emerging markets remain selectively rich in opportunities: Emerging markets (EMs) generally benefit from a weaker US dollar. India is lowering interest rates, is little affected by US tariff policy and many companies are reporting good business performance. For China, the increased fiscal 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 - for example in electronics production.
Technology sector attractive: Among the more offensive sectors, technology, particularly in the areas of artificial intelligence and software, continues to appear interesting.
Japan: The Japanese market is currently supported by positive earnings revisions and a low valuation. The rise in interest rates at the long end could have a positive impact on Japanese financial stocks in the medium term.
Infrastructure remains a long-term theme: Government and corporate spending on infrastructure - especially in the energy sector - remains high, regardless of the tariff conflict. Well-positioned companies will benefit from this.
Technical indicators speak in favor of the US market: The Advance-Decline-Line (AD-Line) of the New York Stock Exchange has reached a new high - historically a reliable signal. In the past, the S&P 500 was invariably higher nine months after such a development (on average slightly more than 10 %).
Risks that we are monitoring:
Tariff consequences for corporate earnings underestimated: the negative effects of the erratic US tariff policy could feed through to 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.
Tariff level: While an average tariff rate of 2.5% applied in 2024, the market is now expecting 15-18%. This is likely to have a negative impact on economic data and company profits - with a delay, but with a clear effect.
No agreement in the tariff dispute with the EU: If there is no agreement in the tariff dispute with the EU by the end of the month or by the deadline on July 9, this could weigh on the markets.
Consumer sector: There are signs of a recession in the consumer sector in the USA.
The outlookfor the luxury sector remains gloomy. From an earnings perspective, the pressure on share prices could continue.
Automotive sector: Western manufacturers are increasingly losing market share in the Chinese market - especially in electric cars, where they are unable to compete with domestic rivals.
Marketing advertisement: All statements published here are for your information only and do 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 correctness and completeness.