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Despite uncertainty – attractive returns and prospects for growth

Market update

The financial markets continue to be marked by uncertainty, with developments in the US and Europe setting the tone. Despite the turbulence, returns have been positive – spring losses have now turned into gains. We expect this trend to continue throughout the year, although fluctuations may occur, driven by economic developments, political decisions and the geopolitical situation. 

As of 20 September, a typical Velliv customer with medium risk and 15 years to retirement has achieved returns between 3.9 and 6.3 per cent. This means Velliv customers continue to enjoy attractive returns at the upper end of the market. These gains are largely driven by tailwinds in the equity markets, particularly due to expectations of interest rate cuts in the US, which have also positively impacted bond returns. 
 
Velliv’s active investment decisions, such as hedging against the weakening US dollar, positioning for rate cuts in the US – including maintaining a generally positive market outlook – have also contributed to strong customer returns. 

In summer 2024, Velliv introduced a new investment strategy, which has since delivered consistently strong returns for customers. This has held true through both ups and downs in the financial markets, underlining the robustness of our new approach.

Lea Vaisalo,

Chief Investment Officer

Portrait of Lea Vaisalo, CIO

Growing uncertainty about the US economy 

The US economy has been showing clear signs of weakness, including a significant drop in job creation over the summer. At the same time, inflation has risen, which is largely due to new tariffs introduced by President Trump. So far, it seems businesses have accepted the situation and taken on some of the costs themselves. However, we expect inflation to continue rising in the coming period. If this happens, it will erode consumer purchasing power and negatively impact economic growth. 
 
The US Federal Reserve cut interest rates at last week’s meeting, and we expect two further rate cuts in 2025 to stimulate the economy. However, this also increases the risk that inflation will remain above the 2 per cent target. 

Mixed signals in Europe 

Uncertainty in continental Europe is somewhat lower, although it remains present. France is experiencing political unrest due to necessary budget tightening, and despite a change in government, we still expect a modest tightening of fiscal policy. 
 
In Germany, markets are awaiting a major fiscal stimulus package aimed at reigniting growth. This package is expected to push interest rates higher. The impact on the Danish economy will depend on how much growth and especially inflation the package generates. The European Central Bank is currently satisfied with the economic outlook and is not expected to cut rates further this year. 

Join Velliv’s investment webinar

Would you like to learn more about the current state of the financial markets? You’re welcome to join Velliv’s upcoming investment webinar. 

Sign up for our investment webinar (in danish)