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The mid-term results of the global equity markets is quite respectable. Following the rapid recovery from the Corona crash in 2020, the stock markets recorded price gains in the first half of 2021. However, the brilliant recovery has used up energy and it is not to be expected that the markets will continue to develop with the same momentum in the coming months. Empirically speaking, returns in the second half of the year are always lower after a very good first half. Since the equity markets have risen very sharply since the Corona low - the MSCI World in Euro terms has risen by over 75 percent - slower gains are therefore to be expected. On the other hand, the risk of sustained corrections or even a bear market is low. This assessment is supported by an analysis of the fundamental data: Both the global economy and corporate profits are far from recessionary tendencies, despite slowing momentum.
With the end of Corona restrictions in many countries, the issue is no longer as dominant in the markets as it has been in recent months. Nevertheless, some uncertainty remains about the further course of the virus pandemic, mainly due to the spread of the highly contagious delta variant. Accordingly, the stock markets reacted unevenly. While cyclically sensitive stocks declined, those that are among the so-called pandemic winners were able to gain. Large technology stocks were particularly in demand. The rise in prices in this sector was additionally boosted by falling long-term interest rates. Since technology stocks dominate the market with their high capitalisation, the stock markets have developed in a friendly manner overall. Investors who follow the benchmark were able to benefit from this in recent weeks. Investors who were overweight in cyclical segments, on the other hand, lost out. On the bond markets, prices were driven disproportionately by lower long-term interest rates.
Despite the relative weakness of cyclical equities, there are justified hopes of a turnaround for this segment in the course of the year. For one thing, the vaccination rate of the population - especially in the industrialised countries - is significantly higher than it was before the Corona wave in autumn 2020. For another, the global economy could still provide positive surprises. There are signs that China could loosen its monetary policy reins again in the second half of the year. This would be a positive signal for the global economy. In addition, the US labor market is recovering in great strides, which raises hopes of a significant increase in new jobs in the late summer. If this were to happen, it would provide fresh impetus for the cyclically sensitive sector of the equity market. Against this backdrop, professional investors should reduce the weighting of cyclical equities in their portfolios and wait for better times to enter the market.