Paris, France – July 1 marks the commencement of the second half of 2024, setting the stage for potential political and economic shifts. Last week, key developments unfolded in France and the United Kingdom, projecting changes in leadership that could impact global markets.
In France, the first round of legislative elections on June 30 saw Marine Le Pen’s far-right National Rally party and allies securing the most votes, hinting at a potential regime change. Meanwhile, British voters are poised to bring in a Labour government after 14 years under Tory rule.
Reflecting on the first six months of the year, global equities experienced robust growth, with the MSCI World Index posting double-digit gains. Notably, the S&P 500 Index in the US surged around 15% during the same period.
While risk assets performed well, fixed income markets showed mixed results, with some government bonds facing losses while others, like US high-yield bonds and emerging market bonds, saw gains. Commodity prices, particularly in energy and precious metals, witnessed significant increases, with gold prices surging amid central bank demand and concerns over geopolitical risks.
Investors are closely monitoring indications of potential Federal Reserve rate cuts, with recent data on core Personal Consumption Expenditures (PCE) and consumer inflation expectations bolstering expectations of Fed easing. Core PCE, a key inflation measure for the Fed, has dropped to 2.6% year-over-year, nearing the Fed’s 2% target. Likewise, consumer inflation expectations have eased, boosting confidence in anchored expectations.
Looking ahead, the outcome of the French parliamentary elections, with RN and NPF parties leading the initial results, could shape market dynamics. Analysts weigh potential scenarios of a far-right majority, far-left majority, or a temporary administrative solution that could impact investor sentiment and market stability.
As investors brace for possible changes in market conditions, insights from economic data releases, such as Purchasing Managers’ Indexes and inflation reports, will offer crucial signals for global economic trends and monetary policy. Amid uncertainties, the trajectory of key indicators and geopolitical developments will shape investment decisions in the second half of the year, underscoring the need for vigilance and strategic planning.
