Dirk Steffen, our Chief Investment Officer EMEA and Global Chief Investment Strategist, discusses recent inflation prints, elaborates on European assets after elections and comments on the Q2 earnings season.
Inflation data from the US came in slightly lower than expected which caused quite a bit of rotation. "Everybody's darlings - the megacaps and growth stocks - underperformed significantly while small-cap stocks, represented by the Russell 2000, outperformed," says Dirk.
Commenting on elections in Europe, Dirk says: "While politics usually impact capital markets just for a short period of time, this time, these effects could last a bit longer." But there's good news: "Fundamentally speaking, European stock markets look quite attractive as we have a turning economy which provides better growth" adding that "this comes at a price that is at a record low versus U.S. equities."
Finally, earnings season just kicked off and although the extended technology industry is still doing very well, growth rates (albeit strong) are coming down. Dirk sees "other sectors coming back and we're getting to a market which is more balanced, leading to an overall healthier market environment."
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