According to S-Pankki, one stock market is now rising above the others in terms of profit prospects

S-Bank June’s share weights signal a cautiously optimistic market outlook.

After the strong rise in the stock market in May, S-Bank is moving Japan from neutral as the only region to overweight in stock investments.

The share weight remains neutral in Finland and emerging markets, Europe is moved from overweight to neutral in May and the United States from underweight to neutral.

In fixed-income investments, euro area investment-grade corporate loans and emerging market loans continue to be overweight. Money market investments continue to be underweight compared to objects with a longer interest duration. Government bonds and high yield corporate bonds continue to have a neutral weight.

“We expect that the direction of the market will be affected in June, especially by the development of the situation in the Middle East. Finding a solution would support risk-taking, but uncertainty considers inflation and interest rates to be the key themes”, assesses S-Bank’s chief strategist Tanja Wennonen-Kärnä evaluate.

The interest rate market first saw upward pressure in May, but towards the end of the month the interest rate calmed down as expectations improved. However, inflationary pressures are still in focus, and central banks are expected to continue to tighten monetary policy, especially in Europe.

A strong start to the year

Wennonen-Kärnä says that the market has shown surprising resilience despite the geopolitical uncertainty.

“The most pessimistic scenarios have not come true, and economic growth has remained at a good level, even though inflationary pressures have increased.”

The returns at the beginning of the year have already risen to the level of a strong equity year.

Stock market returns have been supported especially by companies connected to the technology and artificial intelligence theme of developing markets. Development continued strongly in the United States as well. In Europe, the rise is overshadowed by energy-related problems.