Anchor Insights February 2025

• Better tone of the European stock market, less exposed to the technology sector.
• Slight respite in bond interest rates, given expectations of inflation in adjustment.
• Gold and the dollar benefit from the increase in uncertainty due to the trade war.
• The ECB is not ending the rate cuts, more concerned about growth.

• The imposition of tariffs will have more of an announcement effect than a real one. Risk to growth, not inflation.
• Chronification of the conflict in the Middle East, possible end in Ukraine.
• China, less vulnerable to Trump, continues its recovery.
• Higher-than-expected earnings growth, but moderation in expectations: possible ceiling in the near term.

Opportunities:

• Technology: high growth, but high valuations; Accumulate in falls.
• Utilities and communications: margins improving.
• Health and biotech: higher growth than other sectors and attractive valuations.

• Credit spreads at average levels in European bonds, but high in American bonds. 
• Rally in IRR in government bonds, both European and American.

• The dollar holds the 1.03-1.085 range due to higher interest rates. The weakness of the USD due to the evolution of the public deficit and debt may be counteracted by geopolitics temporarily, but it should depreciate the greenback in 2025.
• Gold is approaching $3,000 on increased demand from China in its change in reserve policy.

• Macroeconomic divergence between regions, reduction of liquidity in financial markets, volatility.
• Reduction of international trade, tariffs and increased costs, more inflation.
• Increase in cybercrime, disruptions in essential infrastructures.
• Financial fragmentation of the Euro-public debt market, debt crisis.
• Political incapacity in the face of inflation, climate crisis and migration causes social tensions, populism.
• Extension of the Israeli-Palestinian war to the Middle East, oil at 200 USD.
• Conflict in Ukraine, escalation of NATO-Russia tension, maintenance of sanctions.

• The divergence in the phase of the economic cycle that is predicted between the US, Europe and China increases uncertainty. The less restrictive monetary policy slows down in the US, continues in Europe and becomes expansive in China while the US continues to grow, Europe is facing recession and China is looking for recovery. The sustainability of the US debt makes it difficult to lower rates without a budgetary adjustment, in the face of a new legislature dominated by an increase in the deficit.
• With more than 75% of S&P companies publishing results, 80% beat forecasts upwards while in Europe, 35% have published with 60% beating expectations. The expected growth rate of earnings remains at 12.7% in the USA and 12.5% in Europe for the next 12 months. 
• The Middle East is experiencing changes as a result of Israel's war with Hezbollah and Hamas, as the conflict between Ukraine and Russia enters the negotiation phase. European countries are facing a political crisis in France and Germany as they ramp up military spending, and the U.S. is seeking a pact between Saudi Arabia and Israel to focus on the Asia-Pacific region in its tussle with China.