2022 started as a rollercoaster of emotions on the stock markets. All major stock exchanges have corrected. There is great uncertainty among investors. Where is the journey heading?
The change from growth to value seems to be the path for successful investments. However, it needs the support of the FED and the ECB. They have already provided the momentum in the market over the past two years. Without this support, we must assume a significant slow-down effect. 10 – 15 % are quite conceivable.
American tech stocks have already lost more than USD 3 trillion in value. The high weighting of the Big Five in the S&P500 index shows the explosive nature of this situation. They currently account for 22% of the market capitalisation of the S&P500. At the same time, we are seeing loans on securities of a magnitude we have not seen for decades.
The FED must therefore act with great caution when it comes to interest rate steps. Interestingly, the rise in oil prices is very noticeable this time. In 2012, when oil prices rose towards USD 150, there was no sign of inflation. Currently, it is a real burden for the markets. Oil is directly or indirectly included in every second product. Therein lies the risk of an inflationary period in the longer term.
We expect the first quarter to present itself with uncertainties and turbulence and then normalisation will take place with the following reporting season. Our restraint has proven to be correct so far and offers the opportunity to use liquidity at the right time in the near future.