Personal values reflected in responsible investing
Sustainability is gaining increasing importance among investors. Therefore, the proposal to invest responsibly is not the only one, but will be the first one on the table from now on. Mark Van Assche, Private Banking and Wealth Office account manager, talks about it with Nathalie Bally, expert in responsible investments at KBC Asset Management.
04-09-2024
Economy
- The manufacturing industry continues to perform quite weak overall. Recent data from Europe (including France and Germany) confirmed this once again in August.
- The service sector still performs better, and in France is experiencing a positive, albeit temporary, boost from the Olympic Games.
- After a weak jobs report in the U.S. earlier this month, previous data were now also revised firmly downward. The labor market there appears to be a lot weaker than expected after all.
Comodity prices - inflation
- In both the US and Europe, the inflation trend is still on the downside.
- Persistant underlying inflation (especially in the services sector) and recent volatile oil prices mean that the disinflation process is proceeding somewhat more slowly than previously thought.
Fiscal and monetary policy
- The exceptional stimulus programmes are being scaled back, but there is no sign of savings drift.
- Programmes such as EU Next Generation and the Inflation Reduction Act in the US are still substantial and continue to offer considerable support.
- China is also stimulating its flagging economy.
- After keeping rates on hold for 14 months, the Fed finally reversed course and delivered a 50bp cut in September.
- This rate cut indicates that the Fed is confident that inflation risk has abated and the focus is now on supporting the labour market.
- Recall that the ECB had already taken a second step earlier this month by cutting its policy rate with another 0.25%.
Bond markets
- The peak of interest rates seems to have been reached.
- The fluctuating chances of both parties in the US presidential elections are also leaving their mark.
- Despite clearly different emphases, the budgetary impact of the two programmes is similar. However, the Trump-camp's tariffs and migration policies may push inflation higher, which could keep interest rates under upward pressure.
Equity markets
- Q2 earnings reporting is almost over.
- Profits may be up about 8% in the US, but we are also seeing earnings growth that is slightly positive in Europe.
- The results of the big tech companies do not disappoint, but in some cases investors seem to be spooked by large planned investments in AI.
- Expectations for next year, meanwhile, are quite elevated.
Risks
- However, the conflict in the Middle East and Ukraine could continue to cause nervousness.
- The U.S. elections may also cause volatility later this year.
- Moreover, the sharply higher Yen caused forced sales in the settlement of carry trades, though this risk seems to have abated.
Investors are looking beyond the AI-narrative that has dominated markets recently. They are looking for cheaper themes that can also benefit from lower interest rates.
Siegfried top, Senior Investment Strategist KBC Asset Management
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