The balance sheet season for the second quarter has gone well so far. So far, there have been only a few negative surprises. The forecasts and outlooks are positive with regard to the uncertainty factors such as problems in the supply chain or the impact of the delta variant. Many companies have raised their own expectations for the third quarter. All of these would in themselves be good reasons to see prices continue to rise. But the relative price development is rather weak. What else can we expect on the stock exchanges in the third quarter and overall in the second half of the year?

Patrick Moonen from NN Investment Partners explains the current situation in the stock markets by saying that the latest results are simply "not surprising".

"Good numbers had always been expected, there was consensus that the second quarter would show high annual growth figures, especially in the cyclical areas of the market." From the third quarter, he believes that earnings growth will normalize rapidly from almost three-digit values set low double-digit values ​​in 2022, which would still be above average.

Problems in the supply chain

Another reason that investors are currently reluctant to buy on the stock market is that there is a certain “pressure on profits”. "Problems in the supply chain can last longer and lead to suboptimal capacity utilization, raw material prices rise, wages could rise, and taxes in the United States could rise," says Moonen. "From a global perspective, the risk-return ratio for equities has deteriorated somewhat since the beginning of the year."

Tilmann Galler, capital market strategist at JP Morgan, is also of the opinion that the situation on the markets has become more restless - even if the stock market year 2021 has so far been exceptionally calm. "The setback was just around four percent this year - compared to around 12 percent on the long-term average." Basically things are going up both economically and on the markets, according to the expert - "just a little more bumpy than before".

Mark Holman of TwentyFour Asset Management also agrees that contrary to the initial expectation of a calm summer, volatility in the markets should increase significantly in the coming weeks. The economic recovery may not prove strong enough, as the markets initially expected and already priced in, according to Holman. In addition, the markets underestimated the potential impact of the Delta variant of Covid-19 on the growth figures in the third quarter.

Galler of JP Morgan sees potential above all in Europe, despite increasing unrest: "The progress made in vaccination and strong fiscal incentives through the EU reconstruction fund create a lot of catching-up potential for Europe," says the economist. The first tranches of the reconstruction fund have been paid out since July. As a consequence, the economic momentum could now shift more strongly from the USA to Europe.

In the case of equities, Galler sees value stocks as being favorably valued, while he sees regional catch-up potential in European equities.

Japanese stocks could also become more interesting with a view to the fourth quarter.

Small caps, on the other hand, have lost some of their attractiveness after the good performance of the past 12 months.

Basically, it is important to align the asset allocation in an even more balanced way.

Nikolas Kreuz from asset manager Invios also relies on Europe - in connection with the megatrend climate change.

“European stocks in particular will see a productivity boost thanks to the move to clean technologies and minimal losses on lost assets,” said Kreuz.