“The bullish trend on the stock markets continued, albeit with greater volatility in the middle of the month, and was confirmed with new highs. This uninterrupted positive trend, combined with the ambitious valuations of the main US ‘growth’ stocks, often leads to the critical description ‘priced for perfection’. The general conditions are certainly not perfect: in the United States there has been the longest government “shutdown” in history, with a consequent lack of economic data; individual cases of default make the news; and a new back and forth in the global trade conflict fuels fears about supply chains in critical sectors. Even the skeptical statements of some experts regarding the massive investments in artificial intelligence (AI) infrastructure and the expected productivity gains thanks to its use are a reminder that the current megatrend must be continuously subjected to critical scrutiny. Not forgetting that we have been in a phase of strong geopolitical tensions for some time. Despite all these potential risks, stock markets are mainly focused on fundamental data and predominantly positive developments so far. This is the analysis of Karin Kunrath, chief investment officer of Raiffeisen Capital Management.
“The results of the companies – notes Kunrath – show notable growth rates and even in the last reporting season the expectations were exceeded again”. These factors, together with positive forecasts for the global economy and earnings growth in 2026, – according to analysis by Raiffeisen Capital Management – “should continue to support the stock market“.
Bonds: pay attention to risk premiums on government bonds
The report highlights the forecast of a decline in medium-term (five-year) German government bond yields and a preference for five-year US government bonds. Raiffeisen Capital Management is also increasing its position in 10-year German and UK government bonds. Greater caution on Italian government bonds, which currently present practically the same risk premium as French government bonds. “In the corporate bond market, – explains Kunrath – we maintain a cautious attitude towards US high yield corporate bonds. We expect an increase in risk premiums in this bond class in the medium term. In the euro corporate bond market, we maintain a neutral positioning.
Contrary to our expectations, emerging market hard currency bonds performed very well in October. Nonetheless, we maintain our cautious attitude for the moment, as the extreme market confidence in emerging market bonds does not convince us.”
Equity: Corporate earnings as an important supporting factor
Global stock markets have continued to perform quite robustly in recent months. In addition to better-than-expected economic data, corporate earnings once again proved to be an important supporting factor. Earnings forecasts for the coming quarters have also recently been revised upwards. “In light of the positive framework conditions – we read in the report – we continue to increase our equity positioning”.
On the emerging markets side, October was a very positive month, both in absolute and relative terms compared to developed stock markets. In particular, Asian stocks linked to the technology sector recorded excellent performances. This allowed emerging market stocks to widen their performance lead and, for the first time in many years, outperform global developed stocks. “The fundamental valuation for the emerging market region – notes Kunrath – remains rather favorable. Telecommunications and raw materials stocks in particular have benefited since the beginning of the year. IT stocks have also recently recovered ground.”
Commodities: Precious metals maintain their upward trend
The international commodity markets have recently recorded a decidedly positive trend. Far from the maximum levels, precious metals maintain their upward trend. From a structural perspective, central bank purchases continue to provide ongoing support. Retail buyers have also recently found a growing interest in gold. Energy commodities have recovered significantly, while industrial metals continue their upward trend.
