Short comments
Investment strategy: Positive fundamentals, oil price risks
Currently – and it remains unclear for how long – oil price developments and the possible consequences of the Iran war on the global economy are the dominating financial market theme. This means that risk-off trades are in focus, though such trades may reverse quickly in case risk perceptions cease to increase and fundamental risks prove to be manageable.
The underlying trend in economic forecasts has recently been positive, with inflation expectations largely stable. In the past, such a combination has almost always proved supportive for the stock markets. In addition, corporate earnings worldwide are rising by at least high-single digits. The monetary environment (interest rates and currencies) is largely in balance and is currently not much of a driver of the stock markets.
In February, the topic of artificial intelligence, combined with enormous selling pressure in the software sector, became a burden, at least temporarily, for the US stock market. In contrast, suppliers and equipment manufacturers for data centres, especially industrial companies (a number of which are based in Europe), utilities and semiconductor manufacturers, continue to benefit from the build-up of AI infrastructure. Europe, with its old economy structure and a low weighting in the software and IT services sector, is currently far less affected by AI-related risks. In addition to Europe, Asian stock markets (MSCI Emerging Asia, but also Japan) are showing positive trends, supported by earnings, with AI disruption not much of an issue there either. In the transition to the AI age, the US market has temporarily lost some of its appeal, but it remains strategically interesting due to its large number of globally leading companies.
When the economy is solid, cyclical sectors (i.e. those influenced by economic trends) perform comparatively well. Small and medium-sized companies also benefit.
Based on attractive yield levels and taking into accounta number ofscenarios, medium-term bond maturities remain a good choice. Due to the constructive economic scenario, corporate bonds, including the high-yield segment, are likely to outperform government bonds (despite jitters in Private Credit markets). We are cautious on the US dollar, despite comparatively high US interest rates and a better-than-feared economy.
(March 2026)
Western Europe
Industry bottoming out?
Europe's economies performed better than expected in 2025. In the euro area, real consumer spending is growing at an annual rate of 1.0-1.5%.
Industrial production in the euro area is higher than a year ago and is now roughly at the same level as before the pandemic, similar tothe US. The special infrastructure fund is gradually finding its way into Germany's economy. Industrial order intake is tentatively pointing to recovery.
Overall, growth in Western Europe remains subdued but is showing signs of recovery, including in the industrial sector. Inflation has been around the European Central Bank's target range for some time.
(February 2026)
Equity sector and themes 2026
Cyclical sectors: Economic conditions favour a neutral to overweight allocation
Technology: AI was the decisive factor in 2025. AI will continue to play a key role in 2026, and consensus estimates suggest that the Magnificent Seven will outpace the overall US market in terms of earnings growth. AI is at present most disruptive in the tech space, with software companies having to prove that their moat sticks. Nonetheless, we see catch-up potential for selected tech companies, where AI has thus far not been a perceived driver.
Industry: With overall industrial production steady, electrification and data centres remain growth areas. Valuations have risen in recent years, especially in Europe. European defence stocks: Strong growth in the coming years.
Cyclical consumer goods Europe (in the US, Mag7 dominate the sector): In the luxury goods sector, business is stabilising and will show modest, but positive, growth in 2026, following a decline in recent years. This is supportive of the investment story, despite the rally in recent months. Automobile manufacturers will continue to see little production growth in 2026, although sales are stabilising for some manufacturers, which argues for stable to possibly higher stock prices.
Utilities: Key drivers are electrification and data centres (similar toindustry), with transmission grids major bottlenecks. Bottlenecks and higher electricity prices are more of a theme in the US (the hotspot for data centres) than in Europe. With earnings momentum declining in 2026, European utilities are not expected to perform as strongly as in 2025, though medium-term trends are positive.
Basic industry/commodities: Selective opportunities, with the performance commodity producers driven by supply and demand conditions. Oil and gas producers: Given the decline in oil prices, valuations appear rich, but cash returns remain attractive.
Financials: European banks are experiencing a slowing but still-positive earnings growth, while valuations are only average. In the insurance sector, a multi-year period of unusually high growth appears to be coming to an end, amidst fairly richvaluations. With stable interest rates and a reasonably good economy, we see increasing potential in the real estate sector. US financial stocks: Banks are fully valued, while insurance companies have become attractive again after recent setbacks.
The classic defensives
Consumer goods for everyday use: One of the weakest sectors over the past 10 years, particularly in Europe. We expect overall subdued but slightly positive growthin 2026 (food and spirits remaining comparatively weak, household products subdued and personal care and beauty products modestly positive). Valuations are mostly undemanding.
Healthcare sector: Performance in the pharmaceutical sector is determined by company-specific pipelines and valuations. Overall modest growth. The pressure exerted by the US government on pharmaceutical prices is likely to be priced in. We continue to see positive trends and reasonable valuations in the US medtechsegment. In Europe, the stock selection in this segment is comparatively challenging.
Market segments and styles
In a steadily growing economy:
AI remains the dominant technology theme for the time being, with AI-related disruption affecting the technology sector the most (witness the often feared “death of software”). AI adoption and the necessary process adjustments will take longer in most parts of the economy and corporate world than often thought.
(January 2026)
AI scenarios for the coming years
From an investor's perspective, a number of questions arise regarding the further development of artificial intelligence (AI). The key issue for the coming years will be the extent to which AI providers succeed in generating the revenues – particularly recurring revenues from company-specific solutions (AI agents) – that justify the current and planned enormous investments. There is also a certain amount of time pressure when it comes to revenues, as investment components – especially semiconductors and servers – will no longer be state-of-the-art in a few years and will need to be replaced.
In the long term, the extent to which AI solutions will spread in the global economy will be crucial. In an optimistic scenario, there is considerable potential in almost all areas of the economy, including industrial manufacturing. In the best-case scenario, AI solutions could far exceed the significance of many other innovations of the past, including the internet.
As far as the corporate sector is concerned, tech giants (hyperscalers) currently dominate, as they have the necessary resources to finance model developers and to position themselves as providers of comprehensive AI solutions. Alphabet (Google) has its own Gemini model, whose 3.0 Pro version has just made a quantum leap, Meta has its open-source platform Llama and Alibaba owns the very powerful Qwen models, which could become the standard in China and parts of Asia. Microsoft is focusing on its partnership with OpenAI (ChatGPT) and, since November, with Anthropic (Claude), in which Amazon has also recently made a significant investment. In addition to “established” large language models, different avenues are explored. One example is SLMs (small language models), promoted by the Chinese company DeepSeek. Such AI laboratories can be found in all regions of the world. Well-known examples in Europe are Mistral AI (France), Helsing (Germany), active in the defence sector, and Aleph Alpha (Germany), with a focus on government agencies. In China, AI models are developed in a closed ecosystem (examples include 01.AI, ZhipuAI, Moonshot AI). In the US, Elon Musk's xAI(Grok) is worth mentioning.
We expect hyperscalersto continue playing a central role in the large-scale provision of AI solutions for businesses and public authorities in the coming years. This means that AI is likely to remain a growth factor, particularly for the US economy and the profits of leading US tech companies. A dip in sales or investment is possible at any time, especially after 2026, with budgets likely not finalised after 2026.
(December 2025)
Central banks: Increased gold purchases since 2022
With Russian foreign exchange reserves frozen following the invasion of Ukraine in the spring of 2022, central banks have increased their gold holdings at the expense of foreign exchange reserves (especially US dollars). The unpredictability of the Trump administration is likely to keep central banks diversifying their reserves away from the US dollar. At present, however, it is mainly financial investors (via ETFs) who are driving up demand.
Gold production has changed little since 2017. If demand increases only slightly in a commodity market with limited opportunities for supply expansion, price increases can be enormous. Gold production is likely to rise in the coming years. Whether this will be enough to meet demand is not a foregone conclusion.
(November 2025)
China: Softer after a good first half of the year
China, the world’s second-largest economy after the US, will remain challenged in the coming years, as falling property prices will not only put pressure on consumer spending but also on the financial system (rising proportion of non-performing mortgages and commercial loans).
China's export economy is less affected by higher US import tariffs than expected. Nevertheless, consumption and production data point to a loss in economic momentum.
Government stimulus measures likely will continue to keep growth in line with the government’s target.
(October 2025)
World economy: Continued decent economic data
The economic data have been coming in about as expected. Europe's economic growth is modest but positive, with the industrial sector stable overall. The purchasing managers index, a timely indicator based on company surveys, rose in July in the eurozone overall and especially in the industrial sector, with the highest values for quite some time in the largest economies, Germany and France.
In the US, growth in private consumption, the main driver of the economy, slowed significantly in the first half of the year. This slowdown is reflected in the labour market data, although there are no signs of a significant turn for the worse. In fact, the US still has the highest purchasing manager indices among large economies, with the industry PMI rising markedly in August.
US import tariffs are likely to be 15-20% higher by the end of the year than at the beginning of the year. The tariffs increase government revenues. This tax (on imports) is borne by companies that export to the US, US importers and, ultimately, US consumers, if the increased tariffs are passed on. Based on export price indices from US trading partners, anecdotal evidence from US companies and the US consumer price index for goods, it appears that all ofthe above-mentioned players are currently bearing part of the increased tariff burden.
After better-than-expected growth in the first half of the year, China has recently started to lose momentum. The US has again extended the window for negotiations in the tariff dispute with China, which is slightly positive for the Chinese economy this year.
In our base scenario, we see certain disruptions to economic activity due to tariffs, but no slump, not even in the US. From next year onwards, US private households will benefit from lower taxes. Declining immigration is causing a structural loss in US growth. In Europe, the effects of tariffs are less pronounced than in the US, and higher government spending, primarily in Germany, is supporting the economy. China's government will continue to keep the economy on track, in line with its targets. The current low oil prices are slightly positive for the global economy and consumers. Low oil prices are slightly positive for the global economy.
In the medium term, we would not overestimate the impact of a partial reorganisation of world trade, which means that no significant reassessment of the global economic outlook is necessary for the coming years.
(September 2025)