General Market Review
Sentiment was strong in July and marked a pivotal uptick as markets rallied on trade deal optimism. There were a few positive earnings surprises from banks, technology and retail companies that helped to fuel the performance. On July 27, the US and the EU announced a new trade agreement imposing a 15% tariff on most EU goods coming into the US. The EU pledged to import USD750bn in LNG over the next three years (USD250bn p.a.) and USD600bn in US investments. Moreover, the EU committed themselves to buy “hundreds of billions” of US-dollars in US military equipment. Since NATO members are already ramping up defense spending and funneling this almost entirely into US-systems like F35s and Patriot batteries, this could be a strategic lock-in for the years to come. On a first note, this deal reduces trade uncertainty and was therefore seen as a positive sign for global risk markets. Hence, equity markets saw record highs with tech leading the rally and S&P500 closing at 2.2%. On the macroeconomic realm, the IMF revised its 2025 and 2026 global growth forecast slightly to 3.0% (April: 2.8%) and 3.1% (April: 3.0%) due to lower effective tariff rates, better financial conditions and fiscal expansion in some major jurisdictions. On the other hand, the IMF warned that trade policy uncertainty and elevated tariffs could drag growth longer-term.
The Federal Reserve held its policy rate unchanged at 4.25% (lower bound) to 4.5% (upper bound) and FED-chair Powell dimmed expectations for an interest-rate cut in September citing a still strong labor market and above-target inflation. Across the pond the ECB kept its deposit rate at 2% halting its easing cycle after seven rate cuts that began roughly one year ago in June 2024 with a key interest rate of 4%.
In the US, the labour market was slightly better as non-farm payrolls increased by +147k in June from +139k in May. The unemployment rate was lower at 4.1% in June. In the Eurozone, the unemployment rate was higher at 6.3%.
In the US, consumer price inflation for the month of June was higher than in the prior month. Headline inflation has increased by +2.7% (y-o-y), and core inflation (excluding energy and food) came in at +2.9% (y-o-y).
In the Eurozone, consumer price inflation figures for the month of June were unchanged versus the prior month. Headline inflation has increased by +2.0% and core-inflation has increased by +2.3% again.
US 10-year treasury yields increased by 14 Bp from 4.23% to 4.37%. whereas German 10-year bund yields have increased by 9 Bp from 2.61% to 2.70%.
The MSCI World Index increased by +1.29% (USD den.) and the MSCI Europe Index rose by +0.73% (EUR den.).
Energy and Transportation
Oil prices were rangebound throughout the month with Brent oil hovering around $ 68 per barrel. In the beginning of the month the OPEC+ consortium has decided to raise headline production by a combined +548k barrels per day in August. Since May OPEC+ has been accelerating the pace of supply increases and by end of September all idled capacity will have been restored. With that OPEC+ will defend its market share at the expense of a potentially oversupplied market. At the end of the month the market sentiment shifted when President Trump shortened his timeline for Russia to show progress in ending the Ukraine conflict. Trump warned of “100% secondary tariffs” on Russian Trading Partners, If Moscow failed to move towards peace in the Ukraine conflict within 10 to 12 days. As a result, key buyers of Russian oil might procure oil from other trading partners. At month end the price of Brent oil closed at $ 72.5 per barrel and thereby Brent was still up by $4.9 per barrel month-on-month. In this environment both oil and gas as well as oil services stocks have performed well. The Stoxx 600 Oil and Gas Index was up by +5,2% (EUR den.) at month end.
Within the transportation sector sentiment has improved significantly, as the US administration has been able to strike two important trade deals with Japan and the EU. In particular shipping stocks propelled higher across all sub-segments, despite the fact, that tanker as well as container freight rates have dropped, and only dry bulk rates firmed up. The Russel 2000 Marine Transportation Index was up by +7.0% (USD denom.) at the end of the month. VLCC-rates (Very Large Crude Tanker) have softened from $25k/day to $18k/day at month end. In the container segment the Shanghai Containerized Freight Index (SCFI) fell another -14% month-on month and -25% year-on-year. Capesize rates in the dry-bulk-segment have firmed up from 17.5k/day to $ 26.5k/day. In a generally positive market environment, the Dow Jones Transportation Average Index (USD) increased by +0.4%. The aviation sub-segment performed solidly. The US Global Jets (USD) Index was up by +4.5%.
European Airlines had a strong month. Ryanair is recovering fares as utilization increases through the summer peak. It is expected that European budget airline unit revenue should get a seasonal boost in the 3rd quarter. Ryanair recorded 3% more passengers in June vs. the last year. Wizz Airlines is regaining market share, with near 11% passenger growth in June. Central and Eastern Europe is set to accelerate growth to 12.6% in the third quarter and 17.8% in the fourth quarter.
Fund Performance
The fund performance of both the USD and EUR denominated share classes was positive.
As the OPEC + consortium will have restored all idled capacity by the end of the September the oil market may enter into an oversupplied state in the months to come. Therefore, the fund’s net long exposure in the oil and gas as well as oil services sector was reduced by ca. -6% of NAV. Further hedging positions in the STOXX 600 Oil and Gas Future contract were built up. Moreover, the long position in the oil services firm Saipem SPA was reduced from +4.5% to +2.25% of NAV. In the fund Saipem shares were sold at a price of EUR 2.35. Investors became increasingly concerned that a legacy project with Thai Oil, which was awarded in 2018 to Saipem, Petrofac and Samsung may lead to further write-offs before the merger between Saipem and Subsea7 may be concluded. In the European Airline sector, the budget segment is currently priced at a discount vs. per-pandemic EV/EBITDA valuation metrics. Wizz Air shares have underperformed during the 1st half year of 2025, as the airline had to deal with engine -related groundings. After a sharp correction in June an initial long position in Wizz Air stock was built up at a share price of GBb 1184 amounting to 2% of NAV. Wiz Air should take advantage of its strong presence in Eastern Europe’s growing aviation market.
The fund’s month end performance attribution was as follows. Within the shipping equity segment the long book had a positive contribution of +3.1% whereas the short book was negative at -0.1%, respectively. Long positions in the crude/product, dry-bulk and offshore supply segments contributed +2.0%, +0,9% and +0,2% respectively. Short positions in the container segment contributed -0.1%. In the long book the strongest performers were Frontline and Genco Shipping. On the other hand, short positions in the freight services segment as well as other transportation sectors has contributed a positive +0.2% and a negative -0.3% respectively.
Within the energy segment, long positions in the oil and gas segment had a positive contribution of +0.6% whereas short position had a negative contribution of -0.9%. Long positions in the oil services as well as the renewable energy segment have contributed -0.2 and -0.3% respectively.
Overall hedging positions via short index futures had a negative effect of -0.2%.
For more information, you can find our latest Factsheet – July 2025.
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