After a brilliant start to the year, the stock markets defied all odds in the second quarter and reached record highs on both sides of the Atlantic. This was all the more surprising after we were still confronted with a veritable US regional bank crisis in March, which ultimately culminated in a serious crisis of confidence at Credit Suisse and its takeover by UBS.
In addition, the central banks decided to successfully tackle the banking crisis with new instruments and, in view of the inflation that was still too high, continued to increase the key interest rates. Even the recent weaker economic data from China has so far failed to impress the leading stock exchanges. One reason for the robustness of the market is likely to be the already distinctly defensive positioning of professional investors. By the end of the year they had already reduced their equity quotas or hedged their portfolios to the “most anticipated recession” and retained this defensive orientation (see chart 1). As a result, it was not possible to levy taxes; on the contrary, performance pressure built up. A second reason is the companies’ positive reporting season for the first quarter and the companies’ outlook, in which there were still no signs of a noticeable weakening of earnings development across the board.