Newsroom

With summer under way, aligning income generation with long-term growth helps reinforce portfolio resilience. A well-balanced allocation remains essential to navigating the coming months with confidence.

Investor sentiment in equities was buoyed last week by the passage of the ‘Big Beautiful Bill’, signs of US economic resilience, and hopes of easing trade tensions. US equities remain our preferred sector for the second half of the year, underpinned by stronger earnings growth expectations, a persistently weaker dollar, and significant exposure to the technology sector.

The Israel–Iran ceasefire has eased concerns about energy prices, thus curbing inflation pressures and maintaining the prospect of a rate cut by the Federal Reserve this autumn. Investor sentiment remains strong, notably on the technology sector. However, the unpredictability of geopolitical developments, coupled with the looming 90-day tariff-pause deadline, leads us to maintain a broad diversification across asset classes and regions.

Despite the escalating geopolitical tensions between Israel, Iran and the US, equity and bond markets are – for now – not pricing in a worst-case scenario. In this context, a diversified allocation is warranted to contain tail risks and mitigate mounting volatility. Gold continues to serve as a hedge against extreme shocks.

Israel’s ‘pre-emptive’ strikes against Iran on 13 June represent a meaningful escalation in what had been Israel’s ongoing battle against primarily Iranian proxies. The conflict has now shifted towards a direct confrontation between the two regional powers in the Middle East.

Markets rallied on US–China trade deal progress and soft US inflation data, boosting risk assets and expectations of a Fed rate cut. Yields fell while credit spreads tightened. However, at the end of the week gains faded as Israel–Iran tensions flared up, but this lifted defence stocks. The US dollar weakened, while gold and oil rose on geopolitical tensions.

The US dollar has declined by more than 10% since President Trump took office, driven by policy uncertainty, lower growth expectations, and rising inflation concerns.

As we enter the second half of the year, the fading trade war rhetoric is paving the way for a renewed focus on diversified asset allocations.

Equity markets welcomed Trump’s 90-day tariff truce by rebounding swiftly. However, we are maintaining a wait-and-see stance during this pause, while hedging against potential US dollar weakness by increasing our exposure to gold.

Tactical risk management helped us ride out one of the sharpest market dips since 2020. Gold and cash remain reliable safe havens.

The US–Europe relations prevailing since World War II are shifting.

Trump’s activism on the US economy is creating fears of recession. To navigate short-term turbulence, we have tactically scaled back our exposure to macro-sensitive assets, such as US equities, including US midcaps, along with high-yield and emerging-market debt, while increasing our allocation to gold.