Executive Summary
Global markets were up in July, but M7 stocks have corrected sharply after soaring to record highs. GCC markets gained positive momentum on the back of good Q2 2024 earnings. However, falling oil prices could be a cause for concern as OPEC+ is caught between maintaining the production cuts to support oil price vs. demand headwinds from China. GCC markets should also be worried about the continued underweight by global fund managers, which could stem from ineffective storytelling of GCC’s macroeconomic strengths, and a significant risk premium assigned due to geopolitical tensions. The world is full of geopolitical hot spots, and they all evolve over time in terms of risk progression. While it is important to model and manage the geopolitical risk, it is certainly far more complicated than something like analysing interest rate movements. In the fixed income market, Yields have started coming down in anticipation of the much awaited first fed rate cut in September. The 1year-10year spread is also down and is at its tightest level in recent months. Geopolitical events, oil price response, M7 earnings and Fed will shape the fortunes of global and regional markets going forward.
