June PMI data showed a weaker trajectory in Europe and Japan, while the USA continued on a strong path.
Regional weakness in business cycle data
June PMI data showed a weaker trajectory in Europe and Japan, while the USA continued on a strong path. In Europe, the UK manufacturing sector appeared healthy, whereas Eurozone data pointed to a slowdown.
Weaker growth in China
Recent economic figures indicate a clear growth slowdown in China during Q2. JP Morgan estimates that the pace of economic growth might have halved in Q2 compared to Q1.
Election excitement
This week, the first TV debate kicks off the US presidential election campaign. Markets are unlikely to react to election news at this point, as polls forecast a tight race. In France, snap election results may cause media commotion, but French markets have already overreacted.
Strong equity market returns in first half
The world equity index has returned 15% in 2024, mainly driven by US large growth firms. The summer will reveal how well the robust economic environment has translated into earnings growth.
We overweight equities
Within equities, we overweight USA and underweight emerging markets. We also have listed European real estate firms as an equity theme. Within fixed income we have a modest overweight in high yield and emerging market bonds.
