July 2024 Outlook: United States-Slightly Positive | Europe-Neutral | Japan-Slightly Positive | China-Slightly Positive | Asia-Neutral
The US Nasdaq index reached a new high, increasing the chances of a rate cut in September. The election results in the UK and France have led to a political shift, which may benefit long-term development. The Nikkei reached a historic high, with expectations of central bank rate to hike. China is confident in achieving its annual 5% growth target, with the “Third Plenary Session” being a key factor. The economic performance of Asian economies is showing diverse development trends.

🇺🇸 United States-Slightly Positive
Nasdaq Index Hitting New High, With Chances of Rate Cut in September Increasing
Both the Nasdaq Composite Index and the S&P 500 Index reached new all-time high closing levels on July 5th. The stock market continued to be hot in the technology and artificial intelligence sectors, with Tesla’s stock price rising consecutively. The inflation data in April and May in the US showed signs of decline, and Federal Reserve Chairman Jerome Powell is confident that inflation will continue to fall to 2%. Additionally, the strong non-farm employment data in June has led most investors to believe that the Fed will start cutting interest rates in September.

🇪🇺 Europe-Neutral
Election Results in UK and France Bringing Political Change, Reforms Potentially Beneficial for Long-Term Development
In the UK general election, the Labour Party achieved a landslide victory. The new government is expected to implement more people-oriented and populist policies. In the French election, the “Nouveau Front populaire”, which gained the most seats, also focused its campaign platform on livelihood issues, such as raising the minimum wage, lowering the retirement age, and re-imposing wealth tax. This is believed to motivate European governments to more actively address public welfare concerns. While there may not be any immediate major changes in the short term, in the long run this is beneficial for the overall development of Europe.

🇯🇵 Japan-Slightly Positive
Nikkei Reaching Historic High With Expectations of Central Bank Rate To Hike
The Nikkei index surpassed 41,000 points in July, reaching a historic high. The AI hype has driven up technology and semiconductor-related stocks, and although Japan’s first-quarter GDP saw a year-on-year decline, it was still better than expected. Additionally, the overall job market remains robust, with the unemployment rate staying at 2.6%, indicating a gradual recovery of the Japanese economy. However, the persistent downward pressure on the yen exchange rate needs to be monitored. The market expects the Bank of Japan to raise interest rates at its monetary policy meeting at the end of this month, which would help stabilize the exchange rate.

🇨🇳 China & Hong Kong-Slightly Positive
China Being Confident of Achieving 5% Annual Growth Target, “Third Plenary Session” Deserving Attention
Although the Hong Kong and mainland Chinese stock markets have underperformed the global markets so far this year, the Hang Seng Index is still hovering around the 18,000-point level. China’s Premier Li Qiang stated at the Davos World Economic Forum that China is able to achieve an economic growth target of around 5% for the full year. The highly anticipated 20th National Congress of the Chinese Communist Party’s Third Plenary Session will be held on July 15th. It is believed that the meeting will introduce a series of larger-scale economic reform measures, further clarifying China’s future development direction. This is expected to create favorable conditions for the upward momentum of the Hong Kong and mainland Chinese stock markets.

Asia-Neutral
Asian Economies Exhibiting Diverse Development Trends
The economic situations in major Asian countries and regions are mixed. South Korea is forecasting 2.6% economic growth in 2024, primarily driven by exports, especially the semiconductor industry. South Korea also plans to provide tax incentives to boost its stock market. For India, the Indian market has performed strongly after the presidential election, with the stock market index reaching all-time highs and displaying a robust upward trend. In contrast, the World Bank has downgraded its economic growth forecast for Thailand. Meanwhile, Indonesia is preparing to impose 100% to 200% safeguard tariffs on imported products ranging from shoes to ceramics to support its domestic industries. This is expected to drive up inflation in Indonesia and constrain China’s exports.

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