Market Updates

For some time now, there have been signs that economic cycles have become longer since World War II. Thus, Edgar Walk, Chief Economist at Metzler Asset Management, has again supplemented his conservative seven-year scenario for medium-term total return forecasts for equities and bonds with a progressive 14-year scenario. For virtually all asset classes, higher returns can be derived from the progressive scenario because this scenario assumes a slower correction of the overvaluation of many investment assets.

Read more on this topic in the newest special edition of market:update.

The equity markets made slight gains in the second quarter, while the bond markets even made substantial gains. 

A decline in interest rates and low inflation rates should open up further scope for a higher valuation of the equity markets. Edgar Walk, Chief Economist at Metzler Asset Management, expects sideways movement on the European bond markets until the end of the year. Uncertainties about trade wars have left their mark on all major economies. However, should the conflicts be resolved, the USA and the euro zone would have good chances for an economic upswing in the third quarter. For China, Walk expects only sluggish growth. Japan is in a comparatively good position with favorable economic prospects.

Read more about Walk’s assessments and forecasts in his Capital Markets Outlook for the third quarter.

To this day, the People’s Republic of China has refrained from relying on traditional allies in foreign policy. Rather, the aim is to tighten the relatively loose web of international relations. In doing so, pragmatic economic considerations often take precedence over political-ideological motives – as can be seen from China’s megaproject, the new Silk Road "One Belt, One Road". However, in view of the continuing protests in Hong Kong, China’s foreign policy strategy could reach its limits. Read more about this in Metzler’s new asia:insight.

Is the longest bull market in US economic history slowly coming to an end? In his Capital Markets Outlook for 2020, Edgar Walk, Chief Economist at Metzler Asset Management, outlines several scenarios for the equity markets. Overall, many factors point to a medium-term sideways trend rather than a major crash. Risks include an overheated labor market in the USA or a political shock. As there is hardly any price potential left on the global stock markets in the medium term, dividends are likely to become the main performance driver. Walk also sees a chance the euro could make up for its undervaluation against the US dollar this year.

Read more about Walk’s predictions in his market:update Annual Outlook for 2020.