Tireless, these markets!

Investment Update - July 2024

June saw the global markets continue to rise (more than 3% in EUR), seemingly untroubled by the gloomy atmosphere that followed the results of the European elections and the French government crisis. Of course, Europe is logically lagging behind (around -1%), with the French markets in particular losing more than 6%. It is clear that the rise of the far right in the European elections and the dissolution of the French National Assembly have taken the wind out of their sails.

 

While Europe was mired in its political and existential crises, the US market continued to ride a very positive wave, especially in the technology and artificial intelligence themes. Moreover, the US market continues to defy gravity, with the rise recorded in June reaching almost 5%.

It was in particular the Nasdaq, the technology index, that once again supported the markets on this upward trajectory, with a 7,5% gain at the end of the month. In the same way as in recent months, this increase continues to be driven by the solid results published by US companies.

That said, in the near future, the presidential election will be held in the US as well; indeed, Biden and Trump have already debated for the first time. The outgoing President, Joe Biden, fumbled on live broadcast in the face of a very incisive Donald Trump. Since then, Trump has widened the gap in the polls. Moreover, there was even talk of changing candidates on the Democratic side, though this possibility was quickly ruled out.

On the economic front, inflation was back on the right track in the United States, with annual growth of 3,3% vs. expectations of 3,4%. Two very positive points should also be noted: monthly inflation fell to 0% and core inflation fell from 3,6% to 3,4%. At the same time, unemployment figures in the US rose slightly, with the unemployment rate rising from 4% to 4,1%. For now, nothing worrisome. Everything is in line with the economic soft landing scenario, which combines disinflation and economic moderation, with no marked deterioration.

Europe, for its part, remains on a positive economic trajectory, and its expected growth has been revised upwards in recent months. While manufacturing activity is still struggling to recover, services continue to support the European economy.

In this rather favourable economic environment, where growth remains strong and inflation is normalising, we continue to recommend an overweight position in equities.

This overweighting is achieved in particular through the sectors most sensitive to the artificial intelligence theme, namely Technology and Communications Services, as well as Consumer Discretionary, a sector that generally benefits from bull market phases and good economic health.

On the fixed income side, the allocation remains neutral, with a shorter duration than the market. European sovereign bonds continue to be overweight in favour of US treasuries. At the same time, the credit position remains neutral in order to take advantage of good carry levels.

Disclaimer

The recommendations contained in this document are, unless otherwise expressly stated, those of Spuerkeess Asset Management (trading name of BCEE Asset Management S.A.) and are produced by Xavier Hannaerts, Head of Investments & Conducting Officer, Aykut Efe, Economist & Strategist, Boris Stammbach, Portfolio Manager, Loïc Chaulacel, Portfolio Manager, and Enrico D’amicis, Portfolio Manager, acting under an employment contract with Spuerkeess Asset Management.

Spuerkeess Asset Management is an entity supervised by the CSSF (Luxembourg’s financial sector supervisory authority) as a UCITS management company and alternative investment fund manager able to provide discretionary portfolio management and investment advisory services.

All external sources (financial information systems, Bloomberg and Refinitiv Datastream) are, unless expressly stated in the recommendation itself, deemed reliable, it being understood that Spuerkeess Asset Management cannot, however, fully guarantee the accuracy, completeness or relevance of the information used by these sources. The information may be either incomplete or condensed and cannot be used as the sole basis for valuing securities.

The valuation of financial instruments and issuers contained in this document is based on data provided by Bloomberg. The full description of the valuation method used by Bloomberg is available at www.bloomberg.com.

Any reference to past performances should not be construed as an indication of future performances. The price or value of the investments to which this document refers directly or indirectly may vary at any time against your interests. Any investment in financial instruments entails certain risks of which Spuerkeess (Banque et Caisse d’Épargne de l’État, Luxembourg) has been informed beforehand, such as the loss of the investment made.

With a view to providing these recommendations to Spuerkeess, Spuerkeess Asset Management has verified all relationships and circumstances that could reasonably be likely to undermine the objectivity of the recommendations contained in this document and confirms the absence of interests and conflicts of interest relating to any financial instrument or issuer to which the recommendations relate directly or indirectly, as well as those of the persons involved in producing these recommendations.

Recommendations are made on the date indicated on the first page of the document and were first released on the same date. The recommendations contained in this document may, where applicable, be used and therefore updated when Spuerkeess Asset Management next provides investment advice to Spuerkeess.

All recommendations sent by Spuerkeess Asset Management to Spuerkeess over the past twelve months may be consulted directly and free of charge at Spuerkeess Asset Management’s registered office, 6a rue Goethe, L-1637 Luxembourg. The information to be consulted shall include the date of dissemination of the recommendation concerned, the identity of the individual(s) involved in the production of the recommendation, the target price and the relevant market price at the time of dissemination, the direction of the recommendation concerned and the period of validity of the target price or recommendation.

The information contained in this document cannot be used as the sole basis for valuing securities and this document does not constitute an issue prospectus.

This document is for information purposes only and does not constitute an offer or solicitation to buy, sell or subscribe. Spuerkeess Asset Management may not be held liable for any consequences that may result from the use of any of the opinions or information contained in this document. The same is true for any omissions.

Spuerkeess Asset Management does not accept any liability for this document if it has been altered, distorted or falsified, particularly through online use.

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