Stock markets on the digital upswing

Although the stock markets are exposed to various potential headwinds, they continue to enjoy a strong upswing from the IT sector. We are therefore increasing the equity allocation slightly.

Stefano Zoffoli

The IT sector lifts the overall market to new heights. (Bild:

The reporting of many listed companies since mid-January shows a picture of moderate sales growth. Thanks to high profitability, there were nevertheless increases in profits. In the USA, for example, this was five per cent in the 4th quarter compared to the previous year.

Most companies find it challenging to venture a forecast for 2024. As a result, the disparity between the cloudy business climate and continued strong consumer spending is widening, particularly in the US.

Record highs possible thanks to IT

At sector level, however, it can be seen that the IT sector has a positive outlook. This applies in particular to companies focussing on artificial intelligence (AI). Due to the increasing breadth and unbroken price momentum, this development could drive the market further forward. This is despite the fact that new long-term highs have just been reached. Based on these premises, we are increasing the equity allocation to a slight overweight in the short term. On the other hand, we are reducing global bonds in view of the very optimistic consensus expectations regarding inflation and interest rate cuts.

Nevertheless, we are sticking to our base scenario and remain sceptical as to whether the Goldilocks scenario with a soft landing, monetary policy easing and a ten per cent increase in earnings in 2024 will continue undisturbed into the coming summer.

How do we currently assess the financial markets and how are we positioned?

  • The high market barriers combined with the exponential scalability of their products and ever new growth areas such as AI are helping the IT sector to achieve outstanding profitability (profit growth of 13 per cent for 2024).
  • The fact that the "Magnificient 7" with a market capitalisation of over USD 1,000 bn (compared with Nestlé's USD 300 bn) will soon grow or be composed differently (e.g. Broadcom instead of Tesla) supports the segment.
  • Main risks: regulation such as the recent EU requirements to open up certain Apple apps, weak growth such as in 2022 (including cloud sales), a sharp rise in interest rates, an escalation in the trade conflict between China and the US.
  • Emerging markets have taken a back seat in the wake of the crisis in China. However, other country issuers such as Mexico, Indonesia, Brazil and the Middle East are important for bonds.
  • In these countries in particular, a cycle of interest rate cuts has begun. This can lead to significant price gains in local currency terms. In addition, the spread between USD issues and US government bonds is an attractive 400 basis points.
  • Main risks: political events such as elections (Mexico, South Africa), geopolitical tensions, second wave of inflation.
  • While the US Federal Reserve dampened hopes of lowering interest rates, the Swiss National Bank (SNB) does not intend to reduce its foreign currency holdings at the same pace. The dollar's fall in value thus ended at 84 centimes and subsequently appreciated by almost four per cent.
  • However, the dollar's appreciation is likely to be only temporary, as the following reasons will soon speak in favour of a weaker dollar again. These include, for example, a stronger increase in US government debt relative to Switzerland, inflation differentials, political stability and trade surpluses.
  • Main risks: Acceleration of the US economy, rapid interest rate cut by the SNB.

Tactical Asset allocation in February 2024

Relative weighting vs. Strategic Asset Allocation (SAA) in % in January and February 2024 (Source: Zürcher Kantonalbank, Asset Management)


Investment Strategy