Investment Outlook Q2 2026
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Hungary: Inflation in July declined to 1.2% YoY much below the expectations; it seems the exchange rate has started to work
Hungary's headline inflation decreased to 1.2% year-on-year in July from 1.7% in June. The published data was lower than the consensus (1.5%) and our forecast (1.6%). The lower-than-expected inflation was widespread among the main inflation categories.
Glencore: excellent performance, higher dividend
Glencore, one of the world’s largest diversified mining companies, released its H1 earnings report yesterday, which showed strong results. The company exceeded analysts’ expectations across all key financial lines, and a significant improvement is also evident on an annual basis. Higher commodity prices greatly contributed to this performance, and Glencore also took advantage of the trading opportunities created by the war in Iran. In light of this, management has increased the dividend and announced a share buyback program. For now, we are keeping the stock on our Equity Top Pick List.
In the shadow of the Iran war, it's worth shifting investment exposures toward a more defensive stance.
Macro
The U.S. is more insulated from the Iran conflict than Europe and Asia due to relative energy independence, yet it remains exposed to oil-price shocks, supply-chain disruptions, and cost pressures. The GDP outlook has become more uncertain, inflation runs above target, with upside risks. The Iran war could trigger weaker growth in the Eurozone, but probably not a recession. In the base case, a 2022 crisis may be avoidable. The Fed might keep rates on hold for a while, while ECB could deliver also hikes this year. Due to inflation risks and the low term premium, we do not consider that longer USD and EUR bonds are attractive. EURHUF looks to be fairly priced with the current set of energy prices and could be attractive in a case of an energy price correction. The long end of the yield curve at around 7.5% looks to be attractive.
Equities
For the time being, the correction has not been sufficient to offset the risks associated with a negative outcome of the war (higher for longer energy prices), as equities are expensive, and the profit cycle is in its late stages. While maintaining a neutral exposure, we are shifting our regional and sectoral recommendations toward a more defensive stance. As a net energy exporter, the economy is less affected in the US, so it may outperform in the short term, but its high valuation poses a risk should long-term yields rise further. The situation in Iran is not as critical for Europe and CEE as the Russia-Ukraine conflict was in 2022, but it is having a more severe impact on growth and inflation than in the US, so we downgrade them to slight underweight and neutral. The strengthening dollar, rising interest rate expectations, and growth risks, could put an end to emerging markets’ recent outperformance. However, strong earnings momentum and improved valuations, providing cushion. We removed some cyclical, high beta exposures from our preferred sector list, like copper, uranium miners and European small caps, and added healthcare as a defensive play.
Bonds
As upside inflation risks have intensified, this could tie the hands of the Fed and the ECB when it comes to cutting interest rates in the coming quarters. In the short term, the likelihood of a stagflation-like outcome has increased, so it is advisable to shift toward a more cautious stance by overweighting cash-like exposures over longer-term bonds.
Commodities
We maintain our neutral view on commodities, as the longer-term outlook depends largely on the duration of the war in the Middle East and the extent of the damage it causes, which is difficult to assess for the time being. In a worst case scenario, prices could rise further, but a deescalation and/or demand destruction would lead to price falls from current elevated levels (especially oil and LNG prices).The upside and downside risks offset each other.
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