The US Federal Reserve is preparing to exit the ultra-loose monetary policy. On the stock market, this is the starting signal for a change of favorites to stocks such as Nestlé and Deutsche Telekom.
Dhe US Federal Reserve, the Fed, and its boss have used their rhetoric to point out that the Fed’s strategy will be changed in the next two years and that, given the economic recovery and rising inflation rates, an exit from the ultra-loose monetary policy is pending. Since the international financial markets initially viewed the US Federal Reserve’s provision as a “signal of stability”, (US) inflation expectations and (US) bond yields have fallen somewhat. For the global stock markets, including Wall Street, this is the technical go-ahead for changing favorites.
After the “safe havens” were in demand in 2020, parallel to the start of the pandemic, a pronounced boom set in in the pandemic winners – including many tech giants – and then in the “re-opening winners”. Against the background of the new Fed strategy, it should come as no surprise when the focus is again on (defensive) growth. On the one hand, these will be selected technology stocks, as the new all-time highs in the Nasdaq Composite Index already show. On the other hand, selected titles from “Good old Europe” should be sought. The standard values here are the French Air Liquide (technical purchase with price target 160 euros), from Switzerland Nestlé and Roche Holding (technical purchase with price target 360 Swiss francs), from Great Britain Diageo (technical purchase with the raised price target to 3630 British pence) and to name the Deutsche Telekom.
Nestlé: the classic among defensive growth stocks
With the shifts that are now beginning (profit-taking from selected pandemic and bull market winners; new investments in defensive technical growth stocks) within the European standard stocks, the Swiss heavyweights should be among the technical winners. The food company Nestlé is the largest European share by market capitalization in free float in the Stoxx 50 (index position 1; index weight currently at 7.05 percent) and the “classic” among defensive growth shares.
Nestlé has also come into the discussion that parts of their product range are not seen as shining examples for “healthy food”. It should come as no surprise here that this will also have an impact on the ongoing restructuring of the “product portfolio”. In contrast, Nestlé also operates a successful investment management and portfolio. For example, the market value of the 23.2 percent stake in the French Euro Stoxx 50 title L’Oréal has now grown to almost 50 billion euros in 2021 due to the good price development of this cosmetics group. From a long-term technical point of view, Nestlé has been in an intact, ideal-typical bull market since 2013 (trend line at CHF 86.50).