Capex

The ECB is now firmly in easing mode, even if it refuses to pre-commit to a specific rate path. What does this data dependency mean for the euro and European yields?

European stocks have massively underperformed US ones since the GFC. Demographics and productivity say this trend will continue, but is that really so?

There is a path to a soft landing, but it is a narrow one. We estimate that there is only a 20% chance that the US will avoid a recession before the end of 2025. We are currently neutral on global equities, but expect to downgrade stocks to underweight during the summer.

Q1 Earnings and sales growth were strong, but the devil is in the details: Without the Magnificent Five, earnings growth for the index would have been negative. On a positive note, margins have stabilized, and earnings growth is expected to broaden into yearend. Companies are optimistic about the economy. Development of AI applications is in full swing, but few companies are monetizing them yet. Consumer spending is strong but is slowing. We reiterate our underweight of consumer sectors, and overweight of Software and Services as the “don’t fight AI” adage holds.

Subdued credit growth and weak global trade will remain headwinds for Emirati stocks. Surging property prices, which have led to a boom in real estate stocks, will also peak soon. Stay neutral on this bourse. Sovereign credit investors, however, should stay overweight UAE in EM credit portfolios.