Effective date: 30/09/2024The expectations for September were low, as this month, known for its unfavourable seasonality, began with the worst week since March 2023, posting a fall of 4.15% in euros for the MSCI ACWI. However, contrary to all expectations, sentiment quickly improved, and the Fed's key rate cut led to a rise in the US stock markets. China also contributed late in the month by announcing a number of stimulus measures, including cuts in various interest rates and support for the property market. Overall, the S&P 500 recorded a gain of 2.02% (USD) and set five new closing records throughout the month. By contrast, the Stoxx 600 edged back 0.32% (EUR). The Chinese market rose 27% as a result of renewed optimism about the country's economic outlook.
The European Central Bank (ECB) made a second rate cut of 25 basis points in September, following an initial reduction in June. This decision, eagerly awaited by the market, reassured investors about the ECB's direction. The Federal Reserve (Fed) followed in the ECB's footsteps by launching its cycle with a first rate cut of 50 basis points at its September meeting. With inflation finally under control, attention has once again turned to the labour market, where downside risks seem to predominate. The latest economic forecasts anticipate a further cut of 50 basis points by the end of the year, followed by 100 basis points in 2025 and 50 basis points in 2026, aiming for a terminal rate of 2.9%.
In United States politics, the second presidential debate pitted Vice President Kamala Harris against Republican candidate Donald Trump. Although no clear winner emerged, the consensus among observers was that Harris fared better. In terms of the economy, the United States presented mixed signals. The ISM services index rose to 51.5 in August, suggesting a slight expansion in the services sector. However, the private sector added only 142,000 non-farm jobs in August, missing the consensus estimate of 160,000. The producer price index (PPI) rose 0.2% in August, with annual growth slowing to 1.7%. The core consumer price index (CPI) rose by 0.3%, exceeding expectations. Industrial output rose by 0.8%, and housing starts jumped by 9.6%. However, consumer confidence fell to 98.7, compared with 103.3 in August.
In the Eurozone, producer price inflation (PPI) accelerated to 0.8% in July, and the composite PMI index reached 51.0 in August, signalling a modest recovery. GDP rose by 0.2% in the second quarter, although industrial production recorded an annual fall of 2.2% in July. Core CPI was confirmed at 2.2% in August, while the services PMI stood at 50.5, reflecting a stable but cautious outlook.
Sector performance in September revealed a clear divergence, with a strong appetite for risk. The consumer discretionary sector performed the best, up 6.58%. By contrast, the energy sector struggled, falling by 3.82% for the month, while the health sector also dropped 3.43%.
The development of the hydrogen economy is behind schedule in 2024. Many projects have been postponed due to a lack of visibility on the conditions for granting support under the various government schemes, both in the US and in Europe. The conditions stipulated were also generally considered far too difficult to meet. In this respect, important information was released in mid-September. Europe and the United States are therefore preparing to finalise their framework with aligned conditions that are far less restrictive than those initially envisaged, in order to enable the take-off that was expected this year. In the US, the Treasury is due to publish the eligibility rules for the clean hydrogen production tax credit at Christmas. In 2025, the 3 dollars per kg of clean hydrogen should unblock many final investment decisions...
In September, the fund rose +3.8% compared with +1.5% for the MSCI ACWI. Industrial stocks made a positive contribution of 200 basis points during the month, driven on the one hand by artificial intelligence stocks and on the other by Chinese stocks, which were heavily bought back after the announcement of the 1st monetary stimulus. Vertiv, Eaton, GE Vernova and Siemens Energy continued to rise during the month. At the same time, Weichai Power and Sungrow experienced a significant upturn. DSV is also benefiting from the confirmation of its takeover of DB Schenker. Finally, Ceres Power, which develops solid oxide fuel cells and electrolysers, rose over 50% following the announcement of new partnerships and an adjustment to its cost structure. Against this backdrop, we supported the recovery in direct and indirect interest in China by initiating a position in Anglo American.
Cleantech could be on the cusp of a new turning point. Remember: in 2021, it experienced a period of euphoria in the wake of the announcements made by the Biden administration (IRA). The deflation of these exaggerations, soon followed by an increase in the cost of financing combined with a lack of visibility on the conditions for granting state subsidies, led to a period of continuous decline lasting almost 3 years. The players involved have gradually redirected their strategy towards preserving their cash flow while awaiting for projects to resume. Inflation is now under control and the monetary authorities have only just begun to cut rates. At the same time, the long-awaited rules for allowing projects to go ahead seem to be about to be laid down, with conditions that are much less stringent than those initially envisaged. There is still uncertainty about the outcome of the US election. But already, it seems increasingly clear that the elements supporting the development of the hydrogen economy will not be called into question, no matter who wins.