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Global Markets: Opportunities for the second half of 2024 – July 2024 CIO Market Commentary

Market Context

  • Global stock markets: Ongoing rally underpinned by global digital transformation
  • French stocks and bonds: Sell-off on populist parties’ victory
  • Safe Asset opportunity: Medium term major bank bonds deliver 6% per annum in USD
  • Inflation and interest rates: Declining which is supporting bonds and stocks globally
  • US Dollar rally: Fading versus Asian currencies as the Fed is getting ready to cut rates
  • Euro: Weakening on political disruption
  • Commodities: Upward dynamic for Gold, Oil, Copper, Bitcoin, supported by capped Dollar and declining interest rates
  • Geopolitics: Populist leaders gain traction across Europe and in the US
  • Logistics: Container prices and transit times soar as Red Sea crisis continues

Global Macro: Resilient growth leads the path towards a “soft landing”

In the US: Positive environment for bonds

Recent indicators suggest a moderation in growth, influenced by restrictive monetary policy and the depletion of pandemic-era excess savings. U.S. data indicate a potential soft landing for the economy, with moderated spending growth likely easing inflation. The Federal Reserve is expected to start cutting rates in September, which should help reduce equity market risks. Lower interest rates and steady growth are favorable for diversified fixed income and equity strategies.

In Europe: Slow growth recovery

The Eurozone economy grew by 0.3% in H1 2024, exceeding expectations. Improving business sentiment indicates continued economic recovery. Strong wage growth and decreasing inflation should boost household consumption as real incomes rise, and a global trade rebound may further support the economy. Inflation is expected to return to the 2% target in the coming quarters, prompting the ECB to maintain its rate-cutting cycle. The French financial assets sold off after French President Emmanuel Macron dissolved parliament and called snap elections on June 9th . Banks, infrastructure and utilities sectors are the most affected.

In China: Growth on track at 5% for 2024

Retail sales increased to 3.7% year-over-year due to holiday spending. Manufacturing and infrastructure investments remain strong, with export growth accelerating to 7.6% year-over-year. Credit growth rose to 8.4% year-over-year driven by higher government bond issuance. Retail sales and investment are expected to grow with more policy support. Continued monetary and fiscal support is anticipated, with full-year GDP growth projected to meet Beijing’s ~5% target. Inflation (CPI) remained at 0.3% year-over-year in June and is expected to rise slightly to near 1% by year-end.

Financial Markets: Overall positive performance for stocks and bonds

Equity: The June performance of global equities was overall positive but mixed across regions: S&P 500 +3.5%, Nasdaq 100 +6.2%, Euro Stoxx 50 -1.8%, Hang Seng China Enterprise Index (HSCEI) -0.9%, Nikkei 225 +2.8%.

Fixed Income: Global yields decreased in June (i.e. Bond prices up). The 10-year US yield dropped by 17bps to 4.34%, the 10-year German yield decreased by 17bps to 2.50%, the 10-year China yield edged down 10bps to 2.25%. Meanwhile, High-Yield bond prices gained 0.8% in USD and 0.3% in EUR on anticipation of central banks rate cuts.

Currencies: All major currency pairs sold off versus the USD in June on US Fed rate cut delay and elections uncertainty across Europe with EURUSD dropping 1.2%.

Commodities & Crypto: Gold increased 0.8%. In contrast, Bitcoin sold off 11.8% on persistent USD positive momentum. Oil prices rallied 5.9% on strong demand.

Equities: Supported by declining interest rates and positive earnings

Global equities rose in June, with the Tech sector leading the gains due to strong earnings and increasing optimism about AI-driven growth.

In the US: Favourable backdrop

The market environment remains favorable due to solid and broadening profit growth, disinflation, a Fed pivoting to rate cuts, and surging investment in AI infrastructure and applications. These factors have driven the S&P 500 to multiple all-time highs. Despite cooling economic growth readings, growth appears stable. The AI sector, in particular, has shown robust trends, fueled by significant capital spending from mega-cap tech companies.

In Europe: Improving backdrop except for French Equity

An improving economic outlook and expected easing of interest rates support Eurozone equities. However, French equities have underperformed due to post-election market nervousness. Since June 9th, large-cap French indexes (CAC 40) fell by 6.5% and small-caps (MSCI Small Caps index) by 12%, while the Euro Stoxx 50 dropped by 3%. The poor performance of President Macron’s Ensemble party suggests challenges ahead for French and Eurozone equities in recovering recent losses. Risks to utilities and infrastructure from the National Rally’s policies and ongoing fiscal concerns may hinder a rebound in sectors like financials and defense stocks.

In China: Expectation to outperform Asian peers

We anticipate the Chinese market will outperform its regional peers in the second half of 2024. Inflation is expected to rise, moving further from a deflationary environment, and credit growth will likely be bolstered by special central government bond issuances. The new housing purchase program should help clear market inventories and stabilize property sales. Recent positive results from internet and e-commerce giants support upward revisions and a broader market rerating.

Currency outlook: The US Dollar rally is fading as the US Fed is getting ready to cut rates

In the second half of 2024, the political shift towards the right wing in Europe and the US presidential election, particularly if former President Trump wins, are expected to introduce uncertainty and increase currency market volatility. A rapid decline in US GDP growth poses the most considerable risk to the USD, potentially highlighting structural weaknesses and its elevated valuation. The rate at which the US economy decelerates will be crucial. Also the steep negative trend of the US deficit is a concern (see graph below).

EURUSD: 1.0710, trading within the [1.05; 1.10] range with negative momentum

The euro is under pressure (-3.3% year to date versus USD) as the ECB started its rate-cutting cycle before the US Fed. Uncertainty from the French snap election adds to this strain. A relative majority win by the National Rally in the French National Assembly would likely maintain this pressure on the euro, potentially pushing EURUSD below 1.05, the lower limit of its current trading range.

USDRMB: at 7.30, on top of the [7.00; 7.30] range

USDRMB reached a new 2024 peak of 7.30, with the PBOC’s daily fixings at multi-month highs, despite its commitment to a stable RMB. The PBOC’s focus on USDRMB stability may limit further increases. The RMB has weakened by approximately 2.3% against the USD year-to-date, compared to an average decline of 5% for Asia ex-Japan currencies.

USDJPY: At 161.50, all-time high since 1986

The Japanese yen depreciated to over 160 per USD, its weakest level since 1986, prompting concerns of potential market intervention by Japanese authorities. Persistent short JPY carry trades are driving USDJPY higher. In June, the yen fell by approximately 2.4% against the USD, extending its year-to-date loss to 13.6%, due to the monetary policy divergence between the Bank of Japan’s zero-rate policy and the Federal Reserve’s 5.5% rate.

Fixed Income: Opportunity remains to lock high interest on cash deposits or high bond yields before central banks cut rates further

French bank bonds are now cheaper with higher yields: Following the snap French elections, yields on all French bank and insurance bonds increased by about 0.50%. French banks benefit from diversified earnings (including asset management, insurance, and capital markets), good asset quality, and strong liquidity policies.

Bond yields remain elevated as inflation declines. Central bank rate cuts have started, and robust economic growth is maintaining low default rates. This environment presents an opportune moment to increase active bond exposure.

We believe there is a window of opportunity that we have not seen in the past 20 years where it is still possible to receive substantial income from cash deposits, with duration of 3 to 6 months (5%+ in USD and ~4.00% in EUR). High interest rates can be locked for longer periods by investing cash in bonds from large Investment Grade banks, which can provide an income per annum of ~6.00% net in USD or ~4.50% net in EUR, with a duration of 2 to 10 years.

Commodities: Upward dynamic for Gold, Oil, Copper, Bitcoin, supported by capped Dollar and declining interest rates

Gold: At USD 2,340/oz, well supported safe haven

Gold remains an attractive diversifier, especially with the upcoming US presidential election. Geopolitical polarization, inflation, the US fiscal deficit, and expected rate cuts by the Fed all support higher gold prices. Gold could rise towards USD 2,500/oz by year-end 2024 and go even higher in 2025, driven by falling US interest rates, increased investment demand, and continued central bank purchases.

Oil: Currently at USD 81.50/bbl with solid demand

Strong demand and OPEC+ efforts to balance the market are expected to push crude oil prices above USD 90/bbl. Oil inventories are likely to decrease in the coming weeks, with oil demand projected to increase by 2–2.5 million barrels per day for H2 2024.

Copper: Currently at USD 9,700/mt, fueled by electric vehicle production and the energy transition race

We anticipate the copper market to remain in deficit, potentially driving prices up to USD 11,500/mt by year-end. With few new mines planned globally and early signs of an upturn in the global capex cycle, fundamentals are expected to tighten. Consequently, copper prices may rise further towards USD 12,000/mt in 2024.


  • War escalation in Ukraine or the Middle East: These conflicts hold significant implications for Europe. Specifically, if Russian forces were to advance across the Belarusian border, 150 kilometers north of Kyiv, this could precipitate a rapid devaluation of EURUSD, potentially driving it towards the 0.90 threshold. Furthermore, statements made by former US President Donald Trump concerning the US’ potential withdrawal from NATO commitments have notably undermined the confidence of US allies.
  • US-China tensions: US-China friction remains strong, with increasing tension around Taiwan and the South China Sea.


  • Geopolitical risk mitigation basket: Gold, Oil, Copper and Bitcoin. As military and economic wars are mounting, these four assets are in increasing demand. With the new US sanctions on Chinese electric vehicles, the most sophisticated chips recently developed in China, and maintained US sanctions for EU products, the dedollarization secular trend is here to stay. We believe moderate exposure to these assets calibrated with respect to investors’ risk tolerance and preferences may help preserve both performance and capital in the long run.
  • Income from safe cash deposits: Cash can be safely placed in cash deposits and earn annualized net interest, e.g. over a period of 6 months: 5%+ in USD, 4.00% in EUR, 5.00% in GBP, 4.00% in AUD.
  • Income from Investment Grade bank bond issuers: Major banks are implicitly protected by central banks as demonstrated in the Credit Suisse crisis where actual bonds (not AT1) remained secured. Investors can benefit from the substantial yield of a diversified bank bond portfolio of 2 to 10-year duration: close to 6.00% in USD, 4.50% in EUR, 5.50% in GBP.
  • High coupon (10%+) on structured deposits: Opportunity from market volatility.
  • Nuclear energy: We believe the nuclear sector will be instrumental in the world’s decarbonization efforts. To achieve fossil fuel reduction targets, the nuclear power industry’s safety standards need to be brought to the next level, for instance by using new technology to recycle uranium. New “green” nuclear energy is high on the agenda in the US, Europe and China, which will build 150 nuclear power plants in the next 15 years.
  • Defense and security: The wars in Ukraine and Palestine have triggered massive investment in military defense and the overall security sector – including cyber, food, energy, and semiconductor supply security – in Europe and around the world.