The GIV elaborates on the latest views, convictions and outlook of our Global CIOs, Investment Platforms and the Amundi Investment Institute.

Deal or no deal, prepare for a volatile summer

Global equities reached new record levels in July on expectations of trade deals, easing of US tariff threats and hopes of a short-term boost to US growth from the One Big Beautiful Bill Act (OBBBA). This has happened  despite  US  tariffs  moving  higher  (when  compared  with before Trump came to power), indicating some complacency in risk assets. On the other hand, bond yields in the US, the UK, Europe, and Japan are reflecting concerns over debt sustainability.

Balance carry and quality in credit

US macro data is holding well, and due to declining inflation, central banks such as the ECB and the BoE are on an easing trajectory. Even the Fed will eventually resume easing. At the same time, our base case is one of no recession in the US and Europe. However, exacerbated by uncertainties around international trade, growth will likely slow down. The fiscal lever becomes important in this context, with its aim to boost spending and security ambitions for instance in Germany.

 

Focus on resilient market segments

While markets reached record levels in July, the returns this year have been driven by a handful of stocks in the US, as well as in Europe. This increases concentration risks, but on the other hand, it signals that there are market segments that have lagged behind. We are on the look-out for such segments and believe the main push to these businesses could come from how well they are able to maintain earnings resilience.

EM strength tested by trade volatility

Global trade has remained strong in the first half of the year, and we’ve witnessed front-loading in exports to the US because of tariffs. Looking ahead, stronger EM growth (vs. DMs) will likely persist amid a generally contained inflationary backdrop, but tariff-related newsflow with respect to any US trade deals with EMs (for instance with Indonesia) and new announcements by the US could create volatility.

Positive on risk, mindful of Trump factor

Even as US economic activity is decelerating, there are many sources of volatility coming from trade, consumption and Trump’s policies on tariffs. On the other hand, the recently approved OBBBA and any resilience in US data could provide a near-term fillip to risk assets. In the Eurozone (EZ), growth will be heterogeneous and supported by the German fiscal boost. With this in mind, we maintain our slightly constructive stance on risk assets, but acknowledge the need for dynamic protections and fine-tuned our FX views.

Read more

global-investment-views-august-2024

Read the full article on the Amundi Research Center