Markets entered uncharted waters in the second half of 2024. The new year began with built-in expectations of a rapid rate cut, which appears to be delayed.

In early 2024 markets expected at least six Fed rate cuts of a quarter of a percentage point each. Market pricing has since been adjusted to expect two cuts, one in September and another before the end of the year. However, the Federal Open Market Committee’s rate-setting members at the June meeting mentioned only one.

At the same time political uncertainty is in the foreground, with the French election, with most analysts expecting equity market volatility to increase as the US approaches the presidential election in November.

A Trump victory, or “Trump II”, could have a bigger impact on Europe than on the US, German bank Berenberg estimates. As before, more protectionism and the risk of a trade war with the US would hurt the smaller and more export-oriented European economies more than the US.

The specific risks that a Trump victory could entail for Europe could cloud investment sentiment toward the region even months before the election.

Goldman Sachs and JP Morgan see summer storms in the markets. JP Morgan warns of the risk of disappointments in the markets, as it explains that, unlike at the beginning of the year, when stocks were favored by economic activity and the expectation of multiple interest rate cuts by the Fed, now, the growth/monetary policy relationship is expected to worsen.

The end of the first half marks the end of a very strong rally in risk assets that began last October and sent global shares about 30% higher, according to Goldman Sachs. In the second half the risks for equity holders increase. Raised valuations, increased focus on political risk, fading optimism about interest rates, slowing growth momentum and over-optimism about the profitability of listed companies are just some of them.

The risk of a new euro crisis is growing, according to well-known Reuters columnist Hugo Dixon, who focuses on the fiscal problems facing the French and Italian economies. An inability to correct fiscal imbalances will also create a problem in the Eurozone, as happened in the past 10 years. France and Italy are much larger economies than Greece and the other eurozone members at the center of the latest crisis.

Athens Stock Exchange – Greek bonds

Levels above 1,500 points for the General Index are “seen” by the National Stock Exchange.

The stock market refers to the political stability in Greece, in contrast to many European countries after the recent European elections, the supportive macroeconomic backdrop (GDP growth >2.0%, much higher than EU averages), the return of investor confidence and increased liquidity, attractive valuations and strong corporate earnings.

These data, according to the National Stock Exchange, can compensate for any pressures from abroad.

The National Stock Exchange’s top picks for the second half are Metlen and Cenergy, which offer the best exposure to the energy transition sector, Titan, which has emerged stronger since the pandemic era, Aegean, whose fundamentals ensure an attractive dividend yield, and Piraeus Bank, which remains unjustifiably undervalued compared to the rest of the Greek banks.

The target price for Metlen is at 50 euros (36% higher than current levels), for Aegean it is at 19.2 euros (margin of increase 61%), for Cenergy at 11 euros (margin of increase 11%), for Titan at 38.2 euros (margin of increase 32%) and for Piraeus at 5.3 euros (margin of increase 45%).

JP Morgan downgraded Greek shares for the second half. The downgrade was made by …carambola

JP Morgan upgraded South Africa from Underperform to Outperform and balanced this upgrade by downgrading Greece from Outperform to Neutral and the Polish market from Neutral to Underperform against other markets.

If there is turmoil in the European bond market, how much could it affect Greek bonds?

It is a fact that the Greek economy today is fortified, it is at an investment grade and with a good fiscal picture. Today the French government deficit is already around 5% of GDP and for us it is around 1% for this year. The only thing the Greek government can do is to shield the market, continuing fiscal stability. We should point out that the ECB has a line of defense in case of turmoil in European bonds. After Greece’s default, a new “superplane” tool was created, the Transmission Protection Instrument (TPI), with which purchases can be made in the secondary market of securities from issuing countries facing a deterioration in financing conditions