Investors’ Outlook: Handle with care

Handle with care

Recent weeks have brought a fresh cycle of investor optimism. Various surveys showed that sentiment picked up, smoothed by a de-escalation in trade tensions between the world’s two largest economies, the US and China, and some better-than-expected macroeconomic data. Small business owners in the US reported stronger, inflation-adjusted sales expectations, as well as confidence in near-term business conditions. And consumers’ moods lightened amid a broader sense that the worst may have been rinsed out.

The improvement is welcome but still fragile, and consumers continue to cite tariffs as a source of concern. After all, trade expectations have gone through a few extra spins. The early rhetoric of “90 deals in 90 days” has not come to fruition, and even the agreements reached so far leave effective tariff rates materially higher than they were before the trade war.

The US-China trade engagement ended in an agreement that will see China supply rare earth materials to the US (essential for everything from clean energy to everyday electronics and defense industries), a move welcomed by markets. With the July 9 deadline for the current tariff pause approaching, US officials have hinted at further deals, adding to the optimism but also leaving investors alert to any setbacks.

Global geopolitical tensions are also still tangled in the mix. In Ukraine, hoped-for negotiations have yet to materialize. Meanwhile, the recent developments in the Middle East have once again shown how quickly geopolitical risk events can escalate and unsettle the markets. 

Amid this rising geopolitical uncertainty, defense budgets have come back in focus. Across Europe and beyond, governments are opening the fiscal taps for military modernization, energy security, and autonomy. Some argue that this sidelines the green transition, but we believe the opposite may be true. Energy resilience, technological sovereignty, and climate adaptation are actually part of national security.

In this edition of the Investors’ Outlook, our colleagues in the Conviction Equities Boutique examine the foundations of the green transition, focusing on its essential building blocks. You'll also find a closer look at the changing European macroeconomic and policy developments, along with an update on oil prices and the factors driving them.

We’re seeing partial improvement. Some areas look brighter, others are still stuck on spin. But this is still a delicate load.