Michaël Lok

Earlier in August, global equity markets tumbled due to disappointing US macro data and the unwinding of the Yen carry trade. However, as we expect elevated market volatility until the US Presidential election in November, it may be premature to consider buying the dip.

Equity markets rallied during the first half of the year, driven by earnings growth, a macro backdrop that was more resilient than expected, and continued appetite for AI winners (the “Magnificent 7”). Looking ahead, we anticipate a broadening of equity markets’ leadership. Read more about our insights in the July edition of UBP’s House View.

Our experts examine the tumultuous US election landscape and historical market behaviour during election years, as well as anticipate the fiscal challenges awaiting the next president amidst record-high US federal debt levels.

Structured products have changed a great deal, after a long period in which they were treated with a degree of scepticism by investors, and as a result of tighter regulations. Although the number of clients using them remains very (too) small, they are likely to play a growing role in asset allocation strategies.

Eased ECB policies will boost Europe's recovery. As US growth normalises, developed market economies should converge in the second half of the year, while recent regional market rallies have reinforced our confidence in the UK and Switzerland.

In light of the extended duration of high interest rates, we’re employing a carry strategy, ramping up our allocation to high-yield bonds.

The unexpected interest rate cut by the Swiss National Bank marks the beginning of a new cycle of global easing, paving the way for new investment opportunities in the broader market. This has bolstered the Bank’s confidence in the Swiss and UK markets, which have been lagging behind the US indices. In addition, we have locked in gains on gold, which was the top performer in March.

As the earnings season ends, US tech companies have exhibited robust results, propelling the Nasdaq Composite to a record high. The Bank maintains its convictions on US and Japanese equities while favouring India over China for emerging market growth exposure. We tactically increased our position on gold on the back of central bank demand and geopolitical uncertainties.

In a landscape marked by economic divergences between regions, with abating inflation and normalising interest rates, our convictions remain on the United States rather than Europe, a tech-oriented bias, and a cautious approach to China, while the return of firmer market fundamentals signal positive performances across various asset classes.