Navigating your investments after market turbulence
Related content
Commodities - Technical Analysis
Gold and silver have broken their downtrends, triggering upward waves that still hold potential for further gains. After a strong retest, the oil price may settle into a range, but there are still opportunities for further gains. Natural gas prices did not reach a new low, but no pattern indicating a reversal has yet emerged. Copper is maintaining its upward trend; it must rise again within the next few days, or the rally could break down. Wheat and corn are also beginning to turn upward again from key support levels after strong retests.
Strong performance from Expedia
Despite the war in the Middle East and rising energy prices, U.S. consumer spending—and, by extension, travel DEMAND—proved to be sufficiently resilient in the second quarter, from which Expedia also benefited greatly. The company beat analysts’ expectations across all major metrics, with revenue growing by 14%, while also successfully maintaining its strategic goal of cost control, resulting in profit growth of over 20%. Cash generation is very strong, which is being used to repurchase shares, and for now, there's no sign of a slowdown on the demand side, leading the company to raise their full-year expectations for this year. Given the improving fundamentals, we are raising our fair value estimate to $365.
The outcome of trade negotiations remains uncertain, and although the worst outcome can be avoided, historically unprecedented high tariffs are still to be expected. Global growth is expected to slow, but many countries are still trying to offset this with high budget spending, which could lead to sticky inflation in different ways across regions.
Macro
In the US, expectations point to a wide base slowdown in economic growth this year and next, to around a below-potential 1.5% rate. The tariff war is taking it’s toll through rising uncertainty on investments and consumption. In the Eurozone tariff war could slow down YoY growth to around 0.5%. Full year growth could be just below 1%. The inflation outlook is on target in Europe and above target in the US, where it is also rising. Upside risks are present due to oil prices, geopolitics, tight labour markets and loose fiscal policies. The priced in USD rate trajectory is far from a done deal, for the two cuts this year, recession pressures should get stronger. In Europe, fiscal spending could drive yields further up. In Hungary we revised down our 2025 GDP growth forecast from 2% to 0.6%, inflation can be around 4.5%. In the summer, we expect pro-HUF forces could remain strong. The carry will be kept at high levels, and we do not expect any policy shift. Regarding the long end of the yield curve, we suggest a cautious approach.
Equities
Although tougher-than-expected tariff announcements in April caused a significant decline in global stock markets, it soon became clear that the pain threshold was not so far away, where US policymakers started to refine their approach. Stock markets recovered in a V-shaped way, and now again have above-average valuation, with supportive but weakening profit growth. The positioning is neutral, with upside and downside risks balancing each other. The US growth advantage over the rest of the world is diminishing, but fiscal policy has remained expansionary, so the risk of recession is low. Europe is cheaper, but the repricing may be hampered by US trade negotiations, stronger euro, lagging profit growth, and falling behind in the AI race. EM’s recent tailwinds may weaken, but CEE is still cheap enough to hold our overweighted recommendation.
Bonds
The growth-slowing effects of tariffs and the growth-stimulating loose fiscal policies may influence inflation risks and central bank policy options differently across regions. Due to significant politically driven uncertainties, it is worth maintaining neutral bond exposure, favoring short/medium maturities.
Commodities
The number of sectors that have performed well this year has clearly widened. However, economic uncertainties have not yet disappeared, so the commodity rally looks somewhat fragile and some caution may be warranted, selective exposure is recommended (e.g. we still favour gold, copper, uranium).
Get more out of your investments!
Global Markets Services
OTP Global Markets offers a broad range of services in the field of local and international money and capital markets.
Read morePrivate Banking Services
Personal care and expertise with OTP Private Banking, along with the knowledge, security, and innovations of a multinational banking group.
Read more