Podcast

Following a relatively calm summer, markets have shown a surprisingly strong tone. Despite ongoing geopolitical, trade, and political risks that could have caused turbulence, global equities have performed positively. Both the United States and Europe have surprised with their economic resilience, the corporate earnings season has been solid, and, above all, expectations have risen that the Federal Reserve will take its first step towards cutting interest rates in September. Overall, the main drivers have worked in favor of risk assets.

Positive catalysts
The earnings season in the U.S. States and Europe was not only stronger than expected in terms of figures, but also in tone. Management teams showed greater confidence, raised their guidance, and highlighted solid order books. Added to this is the strength of the real economy, which shows no signs of a sharp slowdown. Finally, from Jackson Hole, the Fed delivered a more flexible message, leading the market to almost fully price in a rate cut in September.

Clarity towards the final stretch of the year
Looking ahead to the coming months, clarity for investors is improving. Many companies have announced that the stronger cash generation—boosted by the One Big Beautiful Bill Act and its tax deductions—will be allocated to share buybacks and dividends, thus supporting shareholders.
Tariffs, which initially sparked concern, are being mitigated through price increases, supply chain diversification, or hedging. Artificial intelligence is also gaining traction: no longer just vague expectations, but concrete use cases ranging from developer productivity to efficiency in digital advertising and customer service.
On the macro and geopolitical front, transatlantic economic resilience remains in place, trade agreements with the US States are progressing, and although the war in Ukraine continues to warrant caution, the possibility of a roadmap towards a negotiated peace is coming into view. Overall, this points to a more predictable environment, which is always favorable for markets.

Risks to watch out for
Even so, complacency would be unwise. Among the risks to monitor, the independence of the Fed stands out, as it could be undermined by political pressures in the US, creating noise in monetary policy. In Europe, France is at the center of concerns over political stability.
In the technology sector, there remains the risk that profits may not justify the heavy investment in artificial intelligence. Although Nvidia comfortably exceeded forecasts in the last quarter, guidance for the coming quarters was less robust, triggering profit-taking. Tariffs and inflation, while currently contained, could intensify and create new pressures. There is even the possibility that some tariffs could be declared illegal, forcing the US States to repay significant sums. Added to this is the seasonal weakness, as we enter the historically more challenging months for stock markets, along with lingering geopolitical and trade risks.

Conclusion
The overall picture is clear: after a positive summer, we are entering a part of the year with clearer fundamentals, but also with risks that require close monitoring. The challenge for investors is to manage this duality: take advantage of the improvement in support factors, while remaining vigilant against potential sources of instability.