Slight rebound of the US market in July

Key macro data were mixed with the increase in US non-farm payrolls. But, subsequent data became more positive as businesses completed their adjustment to the stronger dollar and lower oil prices. Consumer confidence, housing data and construction spending all improved.

Fed Chair Janet Yellen provided very little new information. She reiterated that the Fed expected to raise interest rates this year and noted that raising sooner would reduce the risks of a steeper eventual hiking cycle.

Sector-wise, energy and materials stocks were by far the worst performers as oil prices and other commodity prices kept falling. On the other hand, oil-consuming and consumer-related sectors were among the best performers..

• The US economy is healthy but starts to slightly slow down, especially regarding trades with China.
• B to C segments are doing well as the US consumer is spending in a context of decent pay rises and employment figures.
• Capex and China raises questions. Industrials and Materials companies are not yet investing sufficiently and the recent fall of the Chinese currency will hurt trade with the country.
• Sector-wise, we reinforced our positions in Consumer Staples while slightly decreasing Consumer Discretionary. To fund these investments, we took some profit in IT and Healthcare stocks. We remain nonetheless positive on the latter.
• We raised or initiated positions in, among others, Pepsi, Diageo, while, reducing positions in, for example, NXP, Texas Instruments, Amgen and Johnson & Johnson.
• We remain negative on Industrial names taking into account the currently low Capex.
• The Energy sector suffers from the low price of oil. Several E&P stocks have severely underperformed.
• Recent figures in Health Care, especially in the Medical technology have been good.
• In Technology, the internet related names are clearly outperforming (Google, Amazon) while the pure technology names disappoint.