05 / 20


Hopes for additional economic aid packages from the states as well as the slow return to everyday life were encouraging for investors. In the U.S., the weekly reported unemployment figures decreased continuously and U.S. Federal Reserve Chairman Jerome Powell predicted a gradual recovery of the economy as well as additional support from the Federal Reserve if necessary, which strengthened the positive mood. As a result, cyclical investments, which had been severely penalized to date, were in particular demand. A ray of hope was also provided by the leading German economic indicator, which recovered more strongly than expected in May, as did the moderate corona case numbers. The latter are barely rising despite the ongoing return to normality, which is currently keeping the fear of a second wave in check. Even the EU could soon become a debt union if the plans of Angela Merkel and Emmanuel Macron are approved. The planned state aid packages will cause the states' debt to swell even further (see FOCUS). Rising tensions between the US and China have not been able to tilt the good mood. US President Donald Trump sees the future of Hong Kong's financial centre at risk because of China's security law. As a result, the US government withdrew the special status that Hong Kong had previously enjoyed under US law from the Chinese Special Administrative Region. As a consequence, Hong Kong loses privileges in its economic relations with the US, such as the lower customs duties it has had up to now in comparison with mainland China. A further burdening factor is the possibility of US sanctions for the Chinese government's actions against the Uighur Muslim minority. The US Congress has already given the green light for punitive measures against Chinese officials and Communist Party officials.

Equity markets

The SMI gained 2.1% in the month under review and the EuroStoxx50 gained 4.2%. The Hang Seng was clearly under pressure due to the new security law in Hong Kong and lost over 6.8%. The leading US stock exchange measured by the S&P 500 gained around 4.5%. In terms of sectors, it was cyclical "value" stocks that triggered a large rotation from the middle of the month onwards and advanced strongly. The difference between the performance of growth stocks and value stocks reached over 3% on one day, even exceeding the value of the large rotation in September 2019. Despite this catch-up, the US Value Index YTD is still trading over 16% lower, while growth stocks are even trading in the "plus" range. With the most recent gains, valuations in the US and Europe have once again reached levels well above the 10-year average.

Interest rates

Interest rates developed very unevenly around the world, with hardly any notable movements in the most important markets. The plans for the EU debt union supported the government bonds of Italy, Portugal, Spain and Greece.

Currencies / Commodities

Falling oil inventories and increased economic optimism led to a further extreme recovery in oil prices (WTI +88%) from rock bottom levels. The USD weakened against the CHF and the EUR was able to recover to the 1.07 mark against the CHF. The USD trended sideways against most currencies. Silver gained almost 19% and gold traded 2.6% higher.


Confidence at the end of the lockdown improved the previously missing breadth of the recent stock market rally thanks to strong sector rotation. The danger of a second wave of contagion and the intensified rhetoric between the US and China currently represent the biggest (more obvious) risks. With valuations already above average, a patient wait-and-see stance still makes sense to us. However, in view of the positive course of the easing measures and the massive state intervention, setbacks should represent an opportunity. In the best case, the economy could even recover in a V-shape in the absence of further incidents (resumption of trade dispute, major bankruptcies or a second wave of infections) - this "best case" scenario as well as the worst-case scenario (second wave of infection) must be kept in mind. In the short term, we are still cautious after the sharp rise. However, given the still rather pessimistic investor sentiment and lack of alternatives, we see setbacks in the market as an opportunity.


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