“After weeks of turbulence triggered by duties by Donald Trump For the ‘day of liberation’, global actions seem to have resumed i Nervi Sales. The equity markets are bouncing abruptly, optimism is increasing and the sentiment of investors is finally improving. Still, expert investors know that it is better not to celebrate prematurely. “This is what he says Jacob FalkencroneGlobal Head of Investment Strategy of BG Saxo and Saxo Bank commenting on the current situation.
“The markets – notes the Global Head of Investment Strategy of BG Saxo and Saxo Bank in its analysis – have undeniably enjoyed a welcome rally after the recent looting of the tariff risks. However, investors must recognize that significant uncertainties still loom. The increase in duties, high evaluations and continuous geopolitical risks make the markets remain vulnerable to sudden reversals. Resilience pays. Investors who maintained their long -term strategies have been rewarded. We may not be still completely out of dangerbut the wisdom of keeping the course is demonstrated over and over again. For investors, this translates into a careful optimism. It could be time to increase exposure to high quality companies with caution with a proven power of determination of prices and useful resilient. But it is also essential to maintain sufficient diversification and liquidity, remaining prepared for potential future volatility “.
A sudden recovery after months of turbulence
Following the Strong Sell-Off triggered by the announcement of the sudden increases in Trump’s duties in early April, equity markets around the world have descended drastically, doing briefly precipitate the S&P 500 In the reliable market territory, down almost 20%. “But almost with the same speed with which he went down, the market – underlines Falkencrone – has bounced with a surprising resilience. Led by powerful recoveries from technology giants as Nvidia, Microsoft and Advanced Micro Devicesthe S&P 500 is now positive for the year and only about 4% below its historical maximum. Investors seem to have concluded that the worst is behind him, interpreting turbulence as a temporary shock led by events rather than the beginning of prolonged recession “.
Behind the most positive sentiment
THE pillars On which this newfound optimism is based, according to Falkencron, there are two: “the loosening of geopolitical tensions and solid corporate profits“The recent respite between the United States and China, which has put a temporary break on very high tariff levels, together with the negotiations for a new commercial agreement with the United Kingdom, in fact, provided a” crucial breath “, significantly reducing the fears of recession, pushing the economists to review their growth forecasts and reduce the esteemed probability of a recession this year.impressive 77% of the companies of the ‘P 500 “has exceeded expectationspushing analysts to review their predictions for the first time in six months. “This – explains Falkencron – suggests that American companies could be much better equipped to manage the duties and economic uncertainty of how much the markets had hypothesized. Consequently, a key indicator of Citigroup that measures the reviews of the profits of analysts has recently become positive, a clear proof that the corporate fundamentals could be on a healthier base than previously feared”.
The power of the positive reviews of profits
The Positive reviews They do not only report an improvement in corporate health but – underlines Falkencron – “raise the sentiment of the investors and they encourage the return to taking risks. In fact, – he continues – the actions tend to respond positively when analysts increase their predictions. The results of the profits, stronger than expected, are already pushing the raised forecasts, strengthening the positive feedback cycle of the improvement of the trust of investors. Basically, companies that guide this recovery action share a common trait: the Power of determination of prices. Companies capable of maintaining profit margins despite the highest duties resisted the storm. Investors should therefore give priorities to companies with solid brands and unique products, well equipped to transfer higher costs without seriously affecting sales or profitability “.
Cautious optimism is needed
But these more rosy prospects are not risks without. The duties, although now lower than initially feared, remain significantly high compared to pre-crisis levels. The companies sensitive to global trade remain cautious, with some who have pause or withdrawn completely the Indications on profits. Sectors such as the automotive one, durable goods and industry have yet to face considerable uncertainty. Also, after this strong rally, the market assessmentsparticularly in the United States, have returned at historically high levels. Although optimism is justified, the actions have already served a relatively rosy economic scenario. This leaves a limited margin of error: if the economic data disappoint, the markets could quickly retract the recent earnings.
Where can the market go? Opportunities and pitfalls
Looking to the future, “Investors – Falkencron warns – must remain vigilant. The continuous positive reviews of the profits would confirm the recent optimism of the market, while the actions of the central banks, in particular the Federal Reserve approach to the cuts of rates in a context of persistent inflation driven by duties, will be carefully monitored. There geographical diversification continue to offer one precious protection. European actions, in particular Germany and Italy, have recorded a strong performance and continue to be exchanged at significant discounts compared to the US counterparties. Invest in regions less sensitive to duties US can provide a crucial balance. In addition, while the initial hype around the AI has slightly cooled, the technological companies related to the structural growth of the AI, such as Nvidia, remain basically strong. Their recent resilience demonstrates the persistent potential of secular growth, particularly interesting in a context of loosening global commercial tensions.
