Author - Harald Besser
While the days are getting shorter and gloomier in our latitudes, the mood on the stock markets is brightening up again somewhat. The main global stock indices all rose in the fall. Technical indicators point to a sustained upward movement. However, the macroeconomic parameters are still anything but favorable for equities, although there are signs of improvement. We have therefore increased the equity allocation in our funds again.
Not perfect, but better
Since the beginning of October, the American S&P 500 has gained around 14%, the Euro Stoxx 50 20% and the world equity index 15.8% in USD (7.7% in EUR). The stock markets are once again much more optimistic about 2023 than they were at the beginning of the fall. Once again, it is the expected interest rate policy of the Fed, which is now seen more positively in view of declining inflation figures. This means that we can also assume a soft landing scenario for 2023. The growth forecasts for next year are -0.1% in the euro zone and 0.4% in the USA.
GDP growth of 1.8% (previously 2.5%) and an inflation rate of 8.1% are expected for the USA in 2022 and GDP growth of 3.2% and an inflation rate of 8.5% for the euro zone. The protests in China should lead to an end to the strict Covid policy, which is a very optimistic sign for the global economy and supply chain issues.
Increasing our equity allocation
After reducing the equity allocation to a minimum on February 2, 2022, it has now been increased again on December 1, 2022. This positions us for a potential year-end rally and a possibly positive equity year in 2023. The decisive factor for this adjustment are so-called technical indicators, the majority of which now suggest a positive trend. The fundamental economic parameters, such as high inflation, are still risk factors, but here too there are already signs of a certain easing.
We are of course monitoring further developments on a daily basis and analyzing whether we see only a short-lived bear market rally or year-end rally or already the beginning of a new bull market. Nothing can yet be ruled out with absolute certainty, but the indicators we track now show a predominantly positive picture of the markets.