From June 30 to July 31, the European stock market saw a slight increase of 0.97%. Meanwhile, U.S. indices quoted in euros also rose, with the S&P 500 up by 5.21% and the Nasdaq gaining 6.78%, boosted by a strengthening dollar.
The American President has been sending mixed signals throughout the month leading up to the artificially set deadline of August 1 for trade agreements with the United States’ partners. Some countries received threatening letters, while others, like Japan, South Korea, and the European Union, managed to secure agreements that are relatively manageable, with tariffs around 15%. In the end, the President announced the tariffs for each country on July 31. Overall, these rates are more favorable than the very high ones from April 2, but some countries, like Switzerland, ended up facing particularly harsh penalties with a surprising rate of 39%.
As a result, much of the uncertainty has been resolved, but these tariffs will significantly complicate things for all companies exporting to the United States. It remains to be seen what impact this will have on consumers and global growth. We will find out in the coming months and quarters.
However, if it turns out that the trade conditions are too imbalanced under this new regime, there’s nothing stopping each country from imposing higher tariffs on American goods, including services and software. This is especially relevant since any notion of stability or even post-war WTO rules seems to have been cast aside by the American President.
When it comes to the Eurozone, it’s important to note that its trade surpluses with the United States are largely driven by a few countries, particularly Germany, Ireland, and Italy, while others are more or less balanced. Some countries stand to lose more than others, and all of them want to protect their national champions: the automotive industry across the Rhine, the pharmaceutical sector in Dublin, and the aerospace industry in France.
Closer to home, the French government seems to be heading towards censorship again after revealing the main points of its 2026 budget plan. The country’s economy is struggling due to this lack of clarity, along with the inevitable fiscal measures needed to tackle a massive deficit nearing 6% of GDP. Meanwhile, the situation in other parts of Europe looks more promising, with Meloni’s Italy clearly managing to stand out. The sovereign bond market reflects this, as Italian interest rates are on track to fall below those of France if the current trend continues.
The global economy is still trying to navigate through the various challenges and upheavals caused by Trump, but it continues to show a notable weakness in consumer spending, as confirmed by the second-quarter earnings reports. For instance, car sales in Europe fell by nearly 5% again in June.
Companies involved in the German recovery plan, whether in defense or infrastructure, are currently the stars of the market. Our highly diversified portfolios are positioned between these two sectors and are showing reasonable performance for now.
The Clartan funds mostly remained steady in July. The Valeurs fund stayed stable for the month, while Europe saw a decline of -0.79%. Ethos, on the other hand, increased by +0.55%. Patrimoine showed a slight gain of +0.11%, Flexible dipped by -0.09%, and Multimanagers rose by +1.45%.