“The stronger-than-expected growth was due to the resilience of consumer spending and strong growth in business investment,” says chief investment officer Guy Wagner.
Indeed, second quarter numbers show that, despite a tightening of monetary policy by central banks, GDP has grown by 0.3% quarter-on-quarter in the eurozone and, more robustly, by 2.4% in the US.
“The peripheral countries showed the strongest momentum,” Wagner adds, “while the German economy stagnated and the apparently strong growth in France came exclusively from exports.”
The report also concludes that the post-pandemic rebound is coming to an end in China, where quarter-on-quarter GDP growth slowed in the second quarter of 2023.
More and more investors seem to be embracing the idea of a soft landing
According to the report, the easing of inflation rates has also continued, now reaching core price indices (though not energy or food). Again, this is going faster in the US, where headline inflation fell to 3% in June. In Europe, the rate is also slowing down, just more sluggishly. “Inflationary pressures appear to be more persistent than in the United States,” says Wagner.
Bigger picture
After enjoying a rebound in the first part of the year, says the report, the stock markets stayed buoyant in July. Looking ahead at the third quarter, Wagner foresees a “more marked slowdown” in the global economy.
“More and more investors seem to be embracing the idea of a soft landing for the global economy,” he explains, “despite the sharp rise in interest rates, given the recent easing in inflationary pressures and the continued resilience of the services sector. The corporate earnings season has also lived up to expectations so far.”
Regarding those corporate earnings, the report points out that the energy, communication services and materials sectors have advanced the most, while less favourable were healthcare, utilities and consumer staples.