Navigating your investments after market turbulence
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Commodities - Technical Analysis
Signs of a turnaround have emerged for gold and silver, and a strong upward move could trigger the next upward wave. A breakout above the key downtrend lines could also be on the horizon, which would further reinforce the positive turnaround. The price of oil has broken below the 100-day moving average, weakening the bullish outlook, and with the uptrend broken, it has entered a correction phase. Natural gas is showing a correction following a sharp decline, but has not yet managed to break through its downtrend line. Copper continues to trade within a wide range and is approaching the lower end of that range. Following a significant decline, wheat and corn prices have reached key support levels from which an upward correction—or even a new uptrend—is likely to begin.
FX - Technical Analysis
The dollar's momentum has eased, but confirming a trend reversal would require a decisive bearish session against the euro. Against the British pound, however, the exchange rate remains in an uptrend. EUR/HUF continues to trade within a narrowing range, while the dollar remains in an uptrend against the forint. USD/JPY has broken out to the upside from its consolidation pattern, suggesting further upside potential. EUR/CHF previously broke below a key support level that had defined its uptrend, and the pair is now characterized by a downtrend.
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).
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