After a strong Q1 for most major equity markets where the S&P 500 had reached a new all-time high on the last trading day of March, April then turned out to be a kind of positivity tipping point and a much tougher month for broader equities than we have become used to since the remarkable rally that had started last November.

Risk-off sentiment among investors was a distinct reaction to fears of a geopolitical escalation in the Middle East, as well as growing doubts to whether the Fed will be able to cut rates at all this year with the latter having been fuelled by a series of hawkish developments as stronger incoming U.S. data became increasingly hard to ignore – including some key economic activity and labour market figures. In this CIO Viewpoint Equity – A look beyond the usual suspects – we comment on the latest equity market developments and provide our view on the German Large and mid cap space.


Key takeaways:

  • April was a tougher month for equities but May has been positive so far. Reactions to positive Q1 earnings surprises have however been underwhelming on average.
  • Valuations of European equities look less stretched than the U.S. market, and several reasons make it likely this will continue, even in the event of further market weakness.
  • We stay optimistic on the DAX but point to the risks around market concentration and de-globalisation. The MDAX looks cheap but relative earnings need to turn.  


The CIO Viewpoint below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.



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