Despite discrepancies in economic data, central banks issued accommodating monetary statements in July. The outlook of a soft landing for the American economy boosted equity markets. Styles and sectors which had fallen behind since the beginning of the year have led the rebound. We have observed sector rotation in favour of value shares, particularly banks and property companies. In this context which is less favourable to growth shares, the Amplegest Pricing Power fund fell –1.17%, compared with +1.78% for its benchmark index.

At the micro level, the quarterly earnings season is in full swing. Around 60% of eurozone companies have published earnings. Results so far are mixed, with the lowest level of net positive surprises since the beginning of post-Covid recovery. Profits are slowing and increasingly concentrated in a small number of companies and sectors. In addition, order books are weakening overall. With two-thirds of the portfolio’s companies having published Q2 2023 results, our pricing power shares show organic growth in turnover as well as double-digit growth in profits. This is better than the market and boosted by higher prices, improved product mix and the reopening of China. The proportion of earnings announcements equal to or better than forecasts is in line with the historic average.

Throughout July we carried out an arbitrage of MTU AERO shares for SAFRAN shares, due to significant concerns surrounding the GTF engine after the recall of 1,200 engines. A long-term partner of GE and global leader in engines for single-aisle airlines, SAFRAN enjoys strong pricing power for airline maintenance checks and is gaining market share with its LEAP engine. Other portfolio adjustments included ASML, which we reduced post-publication because the 2024 outlook is slightly less certain; and Airbus, which we added to because we think production visibility has improved.