Market Overview – August 2024

In July markets remain strong but the first cracks appear · 12 August 2024

Will the immense expenditure linked to artificial intelligence bear fruit?   In July, markets overall continued their march forward. In the first part of the month, the markets were shaken by political events. The results of the European elections were followed by several developments, notably in France which dissolved the National Assembly. In the United States, the Democratic Party finally decided to replace the outgoing president with Kamala Harris, his vice-president, while Donald Trump was shot. In the second half of the month, investors began to become wary of the artificial intelligence frenzy that has fueled this year's bull market. With mixed company results, investors are wondering whether the gargantuan spending of tech giants will generate the expected returns on investments quickly enough. As a result, the technology and consumer discretionary sectors found themselves under pressure. Investors have turned to companies less exposed to technology, and more generally to growth. Utilities and real estate benefited, helped by expected interest rate cuts that should reduce their borrowing costs. Finally, the financial sector also performed well thanks to the good results of the major American banks. At the regional level, the Chinese and Japanese equity markets posted negative performances. In Japan, the anticipation of probable rate increases weighed on the performance of exporting companies. China, meanwhile, continues to show moribund growth. The rate cuts announced during the month were not enough to reassure investors. Conversely, Switzerland posted an excellent performance, benefiting from its defensive status and also probably from European political uncertainty.

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