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.
Looking ahead to January and the coming weeks, we remain constructively optimistic about the markets. Following the positive start to the year, the seasonal rhythm is among the factors supporting the markets. The European industrial sector appears particularly promising, potentially benefiting from increased investment in the mining sector as well as investments in network infrastructure, automation, and robotics. Relatively speaking, the sector has recently demonstrated significant technological strength.
Overall, Europe stands out from a technical perspective: The leading European markets have recently reached new highs and sustainably surpassed previous levels. Gold and emerging markets remain attractive potential portfolio additions. In the bond market, the focus is on short- to medium-term maturities. The future development of the US dollar is difficult to predict. Currently, a sideways movement appears to be the most likely scenario.
Opportunities that we see:
European and Scandinavian industrial stocks: The European industrial sector could benefit from increased investment in areas such as mining, automation, power grid infrastructure, and robotics. Several Scandinavian regions with a strong industrial focus have recently shown improved relative strength.
Potential positive economic development: An economic recovery appears quite realistic for the current year. Leading indicators are improving in most OECD countries (excluding China), suggesting a stabilizing economy. • Selected emerging markets: Emerging markets (including China) can still be considered promising. A weaker US dollar in the medium term, further US interest rate cuts, and additional monetary easing could open up further opportunities for emerging markets.
Construction and real estate stocks: Earnings growth for companies in the construction infrastructure sector, especially those involved with cement, is expected to remain solid in 2026. Even a minor upswing in the real estate market, which is currently more or less at a standstill, is conceivable. This could benefit, among others, real estate companies with commercial/residential exposure and US homebuilder stocks.
Precious metals as a portfolio component: The low positioning of global investors in precious metals suggests further potential. Silver is also selectively in focus – due to structural supply deficits and high demand from the renewable energy sector – as are mining stocks. A risk for gold would primarily arise from a significant easing of geopolitical tensions and a full return of sanctioned countries to international financial markets.
Risks that we are monitoring:
Interest rate situation in Japan: Rising interest rates in Japan could significantly strain the national budget and lead to uncertainty and disruption. A change in interest rate dynamics could lead to a stronger yen over the course of the year. A potential end to the carry trade due to further interest rate hikes and a strengthening yen could trigger sell-offs of technology and other risk stocks, straining global liquidity.
Weaker labor markets: The labor market in the US, as well as in other major economies, could weaken significantly in 2026 and 2027. Increasing automation and the use of AI could lead to more layoffs and a significant overall reduction in jobs, particularly among highly skilled workers and in certain sectors such as insurance, consulting, and the film industry. This poses risks to consumption, social stability, and the economy.
Capital demands of the economy and liquidity risks from IPOs: Massive investments in the US technology sector continue to create an immense demand for capital, which drains liquidity from the markets. This development could be exacerbated by the upcoming IPOs of companies like OpenAI and Anthropic, further draining liquidity from the market and leading to a more challenging period for the stock market from the second half of the year onward.
Insurance sector: Falling interest rates and weaker premium renewal rounds could create a difficult environment for insurers this year, particularly for primary insurers and reinsurers.
Geopolitical tensions: Further geopolitical disruptions cannot be ruled out over the course of the year. For example, a US intervention in Cuba is considered likely, the conflict over Greenland persists, and the situation in Taiwan cannot be considered resolved.
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