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As bond yields declined earlier this year, the equity market rally broadened in the middle of the second quarter, meaning more stocks started gaining value across a wider range of sectors.

Following his dismal performance in the European Parliament elections on 9 June, French President Emmanuel Macron called for a snap election, an effort to discredit Marine Le Pen’s populist National Rally as a serious party of government.

We are halfway through an election year when more global voters – some 49% of the world’s population – are heading to the polls, the most ever.

The ECB cut interest rates by 0.25% to 3.75%, marking the first decline in five years, contrasting with fewer expected cuts from the Fed and BoE. While the starting gun on the rate cutting cycle has started, regional differences will result in a widening gap between central banks.

Prime Minister Rishi Sunak's decision to bring forward the general election to 4 July was unexpected, yet it has caused little market reaction. Labour is widely accepted to win the upcoming election, with expectations for policies promoting a pro-business and pro-worker environment, emphasising sustainable growth, labour market modernisation, and fair pay

Companies are taking advantage of discounted bond prices to buy back debt at a reduced cost, effectively allowing them to pay less while reducing their debt by the full par value. With central banks maintaining high interest rates, more companies are expected to pursue similar debt reduction opportunities over the next 12 to 18 months, enhancing their credit metrics and financial stability.

Markets had a strong start to the year as it appeared likely a soft landing would be achieved. Although investors pared back the number of expected rate cuts this year, this came as a result of a more resilient global economy. Furthermore, it seemed as though central banks had successfully muted inflationary pressures with their series of rapid interest rate hikes.

Some of the world’s most renowned investors have made their fortunes by betting long – buying a stock, commodity or currency expecting the value to go up. Warren Buffett is probably the most recognised investor who adopted this approach.

At the start of 2024, the pieces appeared to be falling in place for President Joe Biden in his re-election year.

The conventional wisdom behind raising interest rates is as follows: higher interest rates make the cost of borrowing more expensive, which tends to cool the housing market.