In the euro zone, the European Central Bank has unchanged its 2%deposit rate, after having dropped it to almost every meeting since June 2024.
- In the euro zone, inflation has not moved.
- The American federal reserve has left its monetary policy unchanged.
- Few movements on the bond markets.
- Technology, energy and communication services have displayed the best performance.
The global economy continues to idle, pending the impact of recent budget support measures announced in the United States and Germany, say Guy Wagner and his team in their latest financial market analysis report, the “highlights”.
“Thus, the annualized growth of 3% of American GDP in the second quarter resulted from an abnormally high contribution of trade following the drop in imports which had strongly believed in the first quarter in anticipation of customs duties. Household consumption displayed only a increase of 1.4%, confirming the moderation already started during the first quarter, “says Guy Wagner, Chief Investment Officer (CIO) of BLI – Banque de Luxembourg Investments. “In the euro zone, the economy avoided a contraction in the second quarter, the GDP increasing by 0.1%, despite the disappearance of the support provided by the exports which had increased in the first quarter before the announcement of the American customs duties.” In China, GDP increased by 5.2% in annual sliding between April and June, thus showing solid growth “carried by resilient exports, while domestic consumption remains fragile due to the lack of resumption of the real estate market”, estimates the Luxembourg economist. In Japan, the trade agreement with the United States providing for customs duties to the tune of 15% will hardly contribute to an improvement in economic growth.
In the euro zone, inflation has not moved
In the United States, the introduction of customs duties had a first slight impact on the price indicators in June. Thus, the overall inflation rate increased from 2.4% in May to 2.7% in June. In the euro zone, inflation did not move in July, the overall inflation rate remaining unchanged at 2% and that excluding energy and food at 2.3%.
The American federal reserve has left its monetary policy unchanged
Despite the pressure exerted by President Donald Trump, the American federal reserve did not change its monetary policy at its July meeting. President Jerome Powell reiterated, as in the previous meeting in June, his wait -and -see position in order to observe which of his two objectives, full employment or inflation of 2%, will prove more at risk following the pricing policy of the new administration. In the euro zone, the European Central Bank has unchanged its 2% deposit rate, after having dropped it to almost every meeting since June 2024. The president of the ECB, Christine Lagarde, said that the ECB was comfortable with the current level of guiding rates since the 2% inflation objective was reached again.
Few movements on bond markets
Bond markets have changed little in July. In the United States, the yield of the 10-year-old treasure voucher increased slightly, roughly finding the level reached at the end of May. In the euro zone, the trend was similar, the long rates in Germany, France, Italy and Spain displaying a slight progression over the month.
Technology, energy and communication services have displayed the best performance
The rise in stock markets continued in July, under the leadership of the persistent momentum of technological values in the United States and financial values in Europe. Guy Wagner: “The tax cuts acted in the United States by the Congress and the Senate as well as levels of customs duties ‘Finals’ less worse than those announced on the day of the” Liberation Day “provided the narrative to justify the pursuit of the Haussier movement.” Thus, helped by the force of the dollar, the MSCI All Country World World World Index Total Return -Expressed Global Sharp index increased by 4.0% over the month. At the regional level, the S&P 500 in the United States, the Stoxx Europe 600, the Topix in Japan and the MSCI Emerging Markets index have all changed favorably. “At the sectoral level, technology, energy and communication services have displayed the best performance while materials, health and basic consumption have recorded the least favorable developments.”