Märkte Insight: Den Aktienmärkten steht ein neuer Härtetest bevor

Market analysts warn that the stock markets are facing a new tough test. Recent record highs have dampened investor sentiment, especially as higher bond yields have risen. While the stocks have proven remarkably resilient so far, the situation is becoming more complex amid very ambitious valuation levels on many stocks markets. International fund managers show nearly unrestrained optimism in the latest BoA survey of them, with equity exposure at its highest level in five years.

However, this same optimism could prove dangerous if the fund managers are already heavily invested in stocks, leaving less capital for new investments that could further push prices higher. At the same time, the selling pressure will grow in more turbulent market phases. BoA experts view the combination of high equity and low cash levels as particularly dangerous and recommend pulling back from risk assets or rebalancing portfolios instead of buying back in.

This is a drastic recommendation, especially given that the bank has been warning of setbacks since May.

The S&P 500 index has risen by nearly eight percent since then, but this rebound has also driven up valuations. The price-to-earnings ratio for the companies represented in the S&P 500 has now reached a record high of 20. According to calculations by Jochen Stanzl from Consorsbank, this would mean that US company profits would need to grow by 25 to 30 percent to justify the current valuations. There would be no cushion for disappointment.

Corporate profits grew by a remarkable 47 percent in the last quarter, but if you factor out special one-time gains from the tech giants Amazon and Alphabet, the growth rate drops to just 30 percent. Ed Yardeni, a capital market expert, only forecasts growth of 25 percent for the rest of the year. The threat to the stock markets comes not only from high valuations but also from the competition from bonds.

Global bond yields have risen sharply in recent days due to growing inflation concerns and fears of US government debt getting out of control. Within a week, the yield on 30-year US Treasury bonds has jumped from 5.18 percent to a record high of 5.34 percent, the highest since the 2007 financial crisis. Consors calculates the dividend yield for the S&P 500 at only five percent, less than what long-term bonds are offering. If this trend continues, it could make the stock market uncomfortable.