In June, the European stock market saw a slight decline of 1.2%. Meanwhile, U.S. indices denominated in euros experienced a modest increase, with the S&P 500 rising by 1.4% and the Nasdaq gaining 2.9%.
We would like to focus on the fundamentals of the economy and businesses, but after more than five months of the Trump presidency, that moment has not yet arrived. Following the dramatic saga of tariffs, which is nearing its conclusion, we found ourselves on the brink of a global conflict due to a major situation in the Middle East.
It’s hard to say whether the White House intended a major escalation from the beginning, but it’s certainly a possibility. Nevertheless, the negotiations over Iran’s nuclear program, which were initiated by Trump under intense pressure, escalated into open conflict when Israel decided to launch airstrikes on June 13, targeting several military installations and eliminating many high-ranking members of the Revolutionary Guards. Iran responded by launching ballistic missiles targeting Israeli cities like Tel Aviv, raising concerns about potential broader retaliatory actions from the Iranian leaders, such as closing the Strait of Hormuz, through which half of the world’s maritime oil barrels pass. An unprecedented event like that would have undoubtedly driven oil prices well above $100 and could have triggered a surge in inflation, potentially leading to a global recession.
However, after a surprise American bombing of Iranian nuclear facilities using stealth B2 bombers, a ceasefire agreement was quickly negotiated and implemented, bringing calm back to the markets. Once again, the best course of action for investors was to stay calm and remain invested.
Overall, despite some tough talk here and there, the negotiations on tariffs seem to be progressing slowly but surely, much like the budget bill presented to Congress that extends the tax cuts from 2017, which were set to expire. On the inflation front, the latest figures indicate a stabilization around 2% in most developed countries. At this point, tariffs have not yet led to the widespread price increases that many feared, and which would be so detrimental to consumers.
We’re seeing some signs of recovery in the microeconomic data. It appears that electronic equipment manufacturers have started placing orders again in the second quarter after a pause in the first quarter. This has led to a significant rebound across the entire supply chain, which we’ve capitalized on by strengthening positions in companies like ASML and reintroducing Micron into Clartan Valeurs. However, the overall weakness in consumer-related sectors still seems to persist at this stage, so we remain cautious about companies exposed to those areas.
The Clartan funds had mixed performances in June. Valeurs dropped by 1.2%, Europe remained flat at 0%, and Ethos saw a gain of 0.4%. Patrimoine reported a decline of 0.1%, Flexible fell by 0.9%, and Multimanagers decreased by 0.5%.
