The portfolio manager highlights three variables: “Many trends now favor stocks”

Investors’ sentiments are also supported by the fact that The US central bank Fed started interest rate cuts on Wednesday with a 50 basis point cut. It fights recession by all means.

“Many developments now favor stocks,” he writes Evli Fund Company portfolio manager Peter Lindahl In the Evli Visio newsletter.

Lindahl lists factors that support the stock market: these include interest rate cuts by central banks, the continuation of artificial intelligence investments and the strong development of company results.

“The combination of these factors makes the riskiest markets such as stocks particularly attractive in the short term,” commented Lindahl.

Inflation cooling down

Late summer and early autumn are notoriously uncertain times in the financial markets, and this year is no exception.

Lindahl still says that he will continue to slightly overweight the shares. This is because stocks are likely to outperform the bond market in late 2024.

“In the broader picture, we think the outlook is positive, especially for US stocks and corporate bonds and emerging market bonds,” Lindahl formulates.

Inflation is cooling, central banks are ready to cut interest rates and earnings are still growing: these signs suggest that the rest of the year could be strong for investors.

Lindahl also reminds us of the risks.

“In our view, the most significant risks are related to growth: the continuation of the decline in employment in the United States or Donald Trump’s a possible presidency may increase fears of a weaker economy as 2025 approaches.”

“Strong earnings growth”

Lindahl believes that the US will continue to stand out in the stock market. Strong economic growth, good profit development of companies and artificial intelligence investments support a better relative market development of shares in the region.

“Since there is probably no recession ahead, our overweighting of US stocks will continue. Investors who prefer strong earnings growth and financial stability are now focusing on the United States instead of other markets,” Evli’s portfolio manager writes.

Regarding investment opportunities outside the US, European real estate companies are, in Lindahl’s opinion, “worth considering”:

“These companies, which are sensitive to interest rate changes, have suffered from high inflation and tight monetary policy, but they have a lot to gain when interest rates fall. When the drop in interest rates becomes even more noticeable, a better relative return development can be expected from the sector.”