General Market Review
In July, global stock markets have mostly risen. In the US, the technology sector has started to weaken as investors have started to rotate out into other sectors given concerns about the profitability of the artificial intelligence technology. Apart from that, July marked a moment in history as the first US president ever resigned shortly before the presidential election. Since Kamala Harris stepped-up the polls are very close, and market participants were unsure on what to expect in terms of key policy choices. Nonetheless, investor’s attention shifted back to the central banks in the US and Japan. The Bank of Japan (BoJ) raised its main policy rate to 0.25%, a level last seen in late 2008. Moreover, it specified a plan to reduce Japanese Government Bond purchases. In the US, the FED’s worries shifted from higher inflation rates to an equally important employment market. As a result, at the end of the month market participants had already priced in three interest rate cuts until the end of this year.
US economic data has cooled down a bit. The number of non-farm payrolls have increased by only +206k in June from +272k in May. The unemployment rate rose from 4.0% in May to 4.1% in June following a slightly increasing trend for a few months.
In the Eurozone private consumption remained robust in June, unemployment rates differed between euro area members but on an aggregated level it was stable at 6.5%.
In the US, consumer price inflation continued to head towards the FED’s target as headline inflation was at +3.0% (y-o-y) and core inflation at +3.3% (y-o-y) for the month of June versus previous readings of +3.3% and +3.4%.
In the Eurozone, consumer price inflation figures in June came in slightly higher as headline was at +2.6% and core inflation at +2.4%.
US 10-year treasury yields decreased from 4.4% to 4.0% at the end of July, whereas 10 year-German government yields decreased from 2.5% to 2.3%.
The MSCI World Index rose by +1.8% (USD den.) and the MSCI Europe Index increased by+1.2% (EUR den.).
Energy and Transportation
The price of Brent oil fell from $ 86.4 per barrel back to $ 80.7 at the end of the month. The Stoxx 600 Oil & Gas Index (Euro denom.) was unchanged at the end of the month.
On the other hand, the S&P Global Clean Energy Sector Index was able to partly recover from the previous month losses. The index increased by +5.5% in July. With that the renewable energy segment is still down by -8.7% year-to-date.
Transportation segments were mixed during the month. The DJ Transportation Average Index gained by +4.4%. Index heavy weights Old Dominion Freight line, a US based mutli-regional motor carrier and rail-road company Union Pacific have reported better than expected earnings at the end of the month. On the other hand, the aviation segment was weak. Investors were concerned about ongoing fare weakness and excess capacity despite strong demand fundamentals. The US Global Jets Index dropped by -3.1%.
The Russell 2000 Marine Transportation Index has decreased by-4.4%. Freight rates have been soft across the various shipping segments, with the exception of certain niche market segments such as the offshore supply sector, where the market has remained firm throughout the month. Container shipping stocks, in particular, have been impacted by the ongoing peace negotiations in the middle east. As a peace agreement would lead to a normalization of trade patterns, excess supply in the market would impact freight rates. Container freight fell by -7% in the month of July. The SCFI (Shanghai Containerized Freight Index) is now up by +235% year-on-year. Crude oil tanker (VLCC – Very Large Crude Carrier) rates have closed the month at $ 25k/day at month end, whereas product tanker rates (MR earnings) have softened further from $ 42.5k/day to $27.4k/day at month end. VLGC (Very Large Gas Carrier) rates have decreased further from $ 48.7k to $31.9k/day at month-end.
Fund Performance
The fund performance of both the USD as well as EUR denominated share classes were negative.
Within transportation the shipping long book had an overall negative contribution of -1,7%. Long positions in the crude/product/chemical, dry-bulk as well as offshore-supply segment contributed a negative -1.2%, -0.9% and +0.4% respectively. On the other hand, the short shipping book in the container and LPG segment had a neutral contribution of -0.2 and +0,2% respectively.
In the area of freight services, the short book had a negative contribution of -0.1% whereas long positions in other transportation segments had a positive contribution of +0.2%. Aviation long positions had a negative contribution of -0.5%.
Within the energy segment the fund’s exposure to French assets had recovered from the previous month losses. The long book in the utility sector had a positive impact of +0.3%. Long positions in the oil & gas segment had a positive contribution of +0.4% and the short book has added a small + 0,05%. On the other hand, the fund’s short position in other energy segments had contribute a negative -1.6%.
Overall hedging positions via short index futures have contributed negatively by ca. -0.2 % to the overall performance result.
For more information, you can find our latest Factsheet – July 2024.
Seahawk Investments GmbH
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Foreign Exchange Fluctuations may have a negative impact on performance results.
Please note that the information from Lipper Leaders relates to the previous month. All rights reserved. Lipper Leaders – © 2024 Lipper Lipper Leaders Ranking Criteria – Ratings from 1 (low) to 5 (high) First Number = Total Return; Second Number = Consistent Return; Third Number = Preservation; Fourth Number = Expense