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.
The start of the year on the stock markets was positive overall. The global stock market showed a slight upward trend. European stock markets outperformed US markets at the beginning of the year. The Japanese market also performed relatively well .
At the sector level, energy, commodities, and industrial stocks were particularly in demand worldwide last month, while technology and cyclical consumer stocks tended to be weaker. In Europe, commodities, energy, utilities, and industrial stocks were among the stronger segments in January, while media, insurance, and automotive stocks performed more weakly.
Looking ahead to March, we remain fundamentally constructive on the markets. Based on the FMM model, earnings growth on the stock markets could ensure an overall positive year for equities. Leading indicators are improving, and monetary and fiscal stimulus measures are supporting the global economy. Nevertheless, volatility could increase in February and in the coming months.
The European industrial sector continues to look promising, and defensive sectors such as telecommunications and consumer staples are also well positioned for the environment, as are agricultural companies. Gold and emerging markets remain interesting as possible additions to the mix. In the bond sector, the focus is on medium-term maturities. A sideways movement appears most likely for the further development of the US dollar.
Opportunities that we see:
Possible positive economic development: An economic recovery still appears realistic in 2026. Leading indicators are improving in most OECD countries (except China), pointing to a stabilised economy. In addition, global financing conditions are improving , which could have a positive impact on the industrial sector.
Defensive sectors: Compared to growth stocks, value stocks are at a multi-year low. Global investors are also underweight in the value segment. At the same time, there are increasing signs of stabilization; the telecommunications sector, for example, can boast stable profits and high free cash flow returns. High expected tax refunds could also support private consumption in the US.
European and Scandinavian industrial stocks: Higher investment in mining, automation, power grid infrastructure, and robotics could continue to have a positive impact on European industry. In addition, European industrial stocks are more favorably valued than their US counterparts.
Selected emerging markets: Emerging markets and regions such as China, Mexico, and Latin America continue to offer selective opportunities. A weaker US dollar in the medium term, further US interest rate cuts, and additional monetary easing could open up further opportunities in emerging markets.
Agricultural stocks: Oil and gas prices have normalized since the beginning of the year, which often has an impact on agricultural prices. Global investors tend to be underweight, although the relative strength of the agricultural sector has improved recently.
Risks that we see:
Capital requirements of the economy and liquidity risk from IPOs: Massive investments in the US technology sector are still accompanied by high capital requirements, which are affecting market liquidity. The potential IPOs of OpenAI and Anthropic in the current year are likely to further exacerbate the liquidity situation from the second half of the year onwards.
New US Federal Reserve Chair nominee Kevin Warsh: Federal Reserve Chair nominee Kevin Warsh is considered conservative in his monetary policy stance. He has spoken out against expanding the Fed's balance sheet. A Fed chairmanship under Warsh could be accompanied by lower liquidity on the part of the central bank.
Interest rate situation in Japan: Rising interest rates in Japan could still weigh on the national budget and lead to uncertainty and turmoil. The interest rate differential between US and Japanese government bonds has narrowed significantly, which could affect the strength of the Japanese yen over the course of the year. A strengthening yen amid rising interest rates could bring an end to carry trades, leading to sell-offs in US tech and risk stocks and weighing on global liquidity.
Development of AI investments: The further development of AI investments and the monetization of AI remain a key risk for 2026. If it becomes apparent that there has been overinvestment and that the returns on these investments are poor, this would weigh heavily on global capital markets.
Lack of momentum in the DAX: The German stock index had a less dynamic start to the year than in 2025. In terms of valuation, the DAX is at a high point in terms of key figures such as price-to-book ratio and price-to-sales ratio, which could have a negative impact on further price performance.
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