Investment bank Julius Baer reveals new opportunities for investors
A review by Julius Baer presents a surprising snapshot of the markets and identifies areas worth investing in now, alongside changes in currency and artificial intelligence forecasts.
A new review by the investment bank Julius Baer presents a relatively optimistic snapshot of global markets, examining the gap between investor concerns and actual data. The bank identifies opportunities in currencies, stocks, and key markets, alongside risks that still require attention.
In the currency sector, Julius Baer raised its three-month forecast for the euro against the dollar to 1.16 euros per dollar. The bank explains that this change relates to a repricing of Federal Reserve policy, against the backdrop of weak employment data and expectations of a tighter monetary policy from the European Central Bank. At the same time, the bank does not expect a prolonged strengthening of the Japanese yen, partly due to interest rate differentials and the monetary policy of the central bank in Japan.
The Swiss franc is losing some of its attractiveness as a safe-haven currency following a decrease in geopolitical tensions. The forecast for the euro-franc pair has been updated to 0.94. In emerging markets, Carry Trade strategies continue to be interesting against the backdrop of stable interest rates and relatively low volatility.
In the energy sector, Julius Baer believes that fears of a winter gas crisis in Europe are exaggerated. Gas prices, hovering around 60 euros per megawatt-hour, reflect a level of concern that does not match reality. The transition to renewable energy, efficiency improvements, and the expansion of investments in solar and battery sectors have reduced the structural demand for gas in Europe.
In the stock sector, the bank does not identify signs of a broad retreat from artificial intelligence investments. According to the review, investments in AI infrastructure are expected to reach about 750 billion dollars this year and cross the trillion-dollar mark in 2027 or 2028. Julius Baer emphasizes that these investments are largely financed by the cash flows of technology giants, rather than reliance on external financing as characterized the dot-com bubble period.
The bank prefers giant companies in the semiconductor and software sectors, especially those integrated into corporate IT systems. However, they warn of possible pressures in the hardware sector, mainly in the memory market, as well as regulatory risks and export restrictions between the USA and China.
The reporting season in Europe also provides a positive picture. In the second quarter, earnings per share in the Stoxx 600 index grew by 22.4%, the strongest pace in three years, with more than 61% of companies beating forecasts. Companies reported stable demand, margin maintenance, and cost savings through the use of AI technologies.
In Japan, a similar trend was recorded. About 72% of Topix index companies beat profit forecasts, and about 15% have already raised their annual profit forecast, with expected growth standing at 12%. Julius Baer notes that companies use forecasts based on a rate of 152 yen per dollar, a more conservative level than the market rate, leaving room for positive surprises.
In a broader view, Julius Baer's main message is that declines in some markets do not necessarily indicate a trend change. The bank sees them largely as a rotation between sectors, as investors move from hardware companies and crowded positions towards value stocks, software, and finance. It is precisely the gap between pessimistic narratives and economic data that may create opportunities for investors.
