Our Investment Strategy Recommendations For July

The financial markets have benefited from ongoing Sino-US negotiations and very accommodative comments from central banks, particularly the Fed. However, fundamentals are deteriorating: less economic growth expected, profit growth revised down, persistent political risks. We remain negative on risky assets in the short term.

We are neutral on stock markets in the long term as we consider that the risk ratio/upside is unfavourable. If everything goes well, according to our base-case scenario (moderate economic growth including in the eurozone, little profit growth in 2019 and 2020, historically very low interest rates and no future shocks as inflation remains low), stock markets will remain at their highs of the year but will struggle to climb higher due to the lack of catalysts. On the other hand, the risk of a correction will be greater if one of these risks materialises.