Despite the risks concerns, many investors remain in the market. However, they are positioning themselves more broadly. Especially global and US equity trackers are in demand. European equities are being hit by losses.
12 April 2022. Frankfurt (Börse Frankfurt). Concerns about sharply rising interest rates in the USA, the consequences of the lockdown in China and the war in Ukraine are weighing on the stock markets. The DAX temporarily falls below the 14,000 mark. Last week, the U.S. Federal Reserve had signaled strong interest rate increases. With this, it wants to fight inflation. This afternoon, a record inflation of 8.3 percent for March will have to be reported from the U.S. according to consensus estimates of economists.
"The signs for the stock market are very subdued - the interest rate hike is a very important issue, and in addition, concerns about the economy are weighing on sentiment," says Frank Mohr of Société Générale. In addition, there is the reporting season: "One or the other cautious outlook in view of the uncertainties can show up in any sector, in any industry." It is quite difficult to assess how companies will comment on their earnings outlook, he said. "Uncertainty shapes the market," the expert summarizes.
Rising bond market yields invalidate equity arguments
Hubert Heuclin of BNP Paribas points to rising yields in the bond market, saying that the inflation-adjusted U.S. benchmark yield has risen by more than 70 basis points within a month and is now just over 20 basis points away from positive territory. "Rising real yields are diminishing the positive environment for risk assets," Heuclin comments. The rise in yields, driven by the FED, is one of the main reasons the stock market has faltered this week, he said. "A return above the zero bound would invalidate the argument that there is no alternative to equities, and would at least reinforce the expectation of further volatility in risk assets."
Heuclin
ZEW Index falls further - ECB under pressure
Meanwhile, sentiment among financial market participants has plummeted. The ZEW index of economic expectations fell in April from -39.3 to -41.0. At the same time, the situation deteriorated from -21.4 to -30.8. "Although the figures are somewhat better than expected, they still provide a negative indication for the coming ifo Business Climate Germany," comments Ulrich Wortberg of Helaba. The ECB's work will not become any easier with the gloomier economic outlook, as it is under pressure to move away from its expansionary monetary policy due to very high inflation.
ETF trading: Global equity indices - broad diversification
Demand for global equity trackers dominates by far in ETF trading. Mohr lists nine equity index products in the top 10, including the Shares Core MSCI World UCITS (IE00B4L5Y983), the Lyxor MSCI World UCITS (FR0010315770) and the euro-hedging Lyxor MSCI World UCITS ETF - Monthly Hedged to EUR (<FR0011660927>). The U.S. equity market is bought by Mohr's clients* primarily through the Amundi Index S&P 500 UCITS (<LU1437017863>) and Shares Core S&P 500 UCITS (IE00B5BMR087). "Buying is dominating everywhere here," comments Mohr. He adds that the uncertain market situation is not reflected much at the moment. "Investors* remain in the market, but are positioning themselves more broadly."
Maurice Touma of Lang & Schwarz also sees continued dominance in equity trackers that are global or focused on the S&P 500. In addition, his clients would speculate on NASDAQ setbacks. Private investors* would therefore currently invest in the WISDOMTREE NASDAQ 100 3X DAILY SHORT ETC (IE00BLRPRJ20).
Heuclin also registers equity ETFs the largest inflows in global equity indices. UBS ETF MSCI ACWI (<IE00BYM11J43>) and UBS ETF MSCI ACWI (<IE00BYM11L64>) top the list of most traded stocks. BNP Paribas is also seeing inflows in most regions. However, Heuclin's clients are selling Europe and eurozone equity trackers, such as the iShares Core EURO STOXX 50 UCITS (IE0008471009).
Mohr
Sectors: technology, energy, health and sustainability
With 25 percent of the total volume, the technology sector dominates at Société Générale. Among them, Mohr said, the iShares Digital Security UCITS (IE00BG0J4C88), a digital security themed ETF, is the main buy. Mohr is also seeing inflows into energy ETFs and the healthcare sector. Demand for sustainable investment opportunities remains high, he said. This demand includes broad-based investments such as the iShares Global Clean Energy UCITS (IE00B1XNHC34) or its Invesco counterpart Invesco Global Clean Energy UCITS (IE00BLRB0242), but also themes such as hydrogen with the VanEck Hydrogen Economy UCITS (IE00BMDH1538) or nutrition, where the Rize Sustainable Future of Food (IE00BLRPQH31) is being bought. At Lang & Schwarz, the iShares Global Clean Energy UCITS (IE00B1XNHC34) also dominates among sustainable ETFs.
Commodities: High demand for natural gas ETCs
Touma notes big moves in the commodities book. In particular, he says, WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98) is selling. "Here, investors are currently using the 2008 highs to exit." There would be many new entrants* at the same time. In the wake of natural gas price developments, however, there would also be more movements in oil ETFs at Lang & Schwarz, in both directions. For example, Touma notes more orders in WisdomTree WTI Crude Oil 2x Daily Leveraged (<DE000A2BDEB6>). The search for alternatives to gold investments is reflected in high demand for palladium, such as WisdomTree Physical Palladium (<DE000A0N62E5>), he says.
Fixed income: short-dated U.S. government securities and inflation protection sought after
Bond markets have seen a sell-off recently. Marti Hartmann of Commerzbank attributes this development to inflation fears. Yields on government bonds of all maturities rose.
Heuclin notes demand for U.S. corporate bonds with purchases of the iShares USD Corp Bond UCITS (IE0032895942) and the iShares USD High Yield Corp Bond (IE00B4PY7Y77). Eurozone interest rate securities, on the other hand, are selling, as seen in the iShares Core EUR Corp Bond (IE00B3F81R35). Among the government securities dominate titles of the emerging markets such as short-dated USA. For example, Heuclin lists inflows in the iShares J.P. Morgan USD EM Bond (IE00BYXYYK40) and the iShares USD Treasury Bond 1-3yr (IE00BDFK1573).
Mohr paints a similar picture. U.S. Treasuries with maturities of one to three years (IE00B14X4S71) are on the buy sides, European government securities (LU1681046774) on the sell lists. The inflation theme is also present in bond ETFs, especially, he says. Mohr notes, for example, that his clients are investing primarily in Lyxor EUR 2-10Y Inflation Expectations (LU1390062245). Some risk appetite is evident in purchases of high-yield securities, he says, including the SPDR Barclays Euro High Yield Bond (IE00B6YX5M31).
Equities | |
Welt | Buys |
USA | Buys |
Europe | Sells |
Branchen | |
Technology | Buys |
Energy | Buys |
Sustainablity | Buys |
Fixe Income | |
Government bonds Short-dated USA | Buys |
Eurozone government bonds | Sells |
Infaltion protected bonds | Buys |
Corporate bonds global, USA | Buys |
from: Antje Erhard 12 April 2022, © Deutsche Börse AG
Antje Erhard is a journalist and moderator specializing in the stock market, business and finance.
Feedback and questions to redaktion@deutsche-boerse.com.
Erhard