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Optimism in the Markets: Rising share prices & Falling bond yields

Market participants focused on the US inflation figures for April. Following the mostly negative surprises of previous months, which indicated an end to the disinflation trend, there was now a positive surprise. Market participants' relief manifested itself in rising share prices and falling bond yields. Hopes of interest rate cuts were revived. Specifically, core inflation showed a monthly increase of 0.3 % in April, compared to regular price increases of +0.4 % in previous months. The broad inflation index also rose by just 0.3 %. Weaker than expected retail sales were also published. This is also likely to exert less pressure on inflation in the future. In addition, weakening consumption is giving the US Federal Reserve new arguments to start cutting interest rates soon after all. For the stock markets, however, it remains a balancing act. One “wrong” inflation figure and the hope of interest rate cuts is dashed again. However, consumption and the labor market must not weaken too much either, as this would ultimately have a negative impact on corporate profits. Meanwhile, sentiment in Europe continued to brighten. The ZEW index continued its upward trend and rose more strongly than expected. There was also a significant improvement in the situation component. Despite ongoing negative reporting, the situation in China remains stable. GDP rose by 1.6% in the 1st quarter - the government's target of 5% growth for the year as a whole therefore appears to be within reach. The slightly lower than expected inflation data in the USA caused yields to fall further and the 10-year government bond moved towards 4.40 %. The Bund yield, on the other hand, oscillated around 2.50 %. In the friendly market environment, the credit segments were also able to record increases, more or less in line with government bonds. With their somewhat shorter duration positioning, the bond side of the Moventum portfolios developed positively, but not quite as dynamically as the broad bond market. However, thanks to the global (currency-hedged) positioning, it was possible to benefit from the disproportionate fall in interest rates in the USA. Price gains on the stock markets were highest in Europe. The US market also rose, but the weaker US dollar reduced the gains for investors thinking in euros. The persistently weak Japanese yen meant that the Japanese stock market even closed in negative territory in euro terms. Within the emerging markets, it was the Chinese stock market that drove the index. By contrast, investors did not focus on the smaller emerging markets included in our index. In terms of allocation, the Moventum portfolios were unable to benefit from these developments. What did help, however, was the outperformance of the healthcare and technology sectors, both of which are overweighted in the portfolios. At style level, “growth” and “value” performed similarly - the impact on performance was therefore manageable. The positive performance on the equity and bond markets in the last two weeks also benefited the Moventum portfolios, all of which recorded gains. However, the bond side suffered from its shorter duration positioning in the positive interest rate environment and, on the equity side, the negative performance of the overweighted Japanese equity market in particular had a negative impact. This was only partially offset by the favorable sector positioning. This generally favorable market environment also ensured adequate gains across the board in the PWM portfolio over the last two weeks (06.05.2024-17.05.2024). All portfolio components performed positively. Within the alternatives, only the Aquantum Active Range hedging fund recorded a slightly negative performance - in line with the trend. All other funds made gains. Mixed funds, bond funds and equity funds benefited from the favorable market conditions. Within the equity funds, both value and growth strategies were convincing. Meanwhile, HANSAgold benefited from the ongoing rally in the price of gold. Thanks to currency hedging, the weaker US dollar had no negative impact on this fund.

Performance overview.


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