Weekly review 7 August 2023: What ever happened in the summer?


Did you focus less on monitoring the markets during your holiday? The theme version of our weekly review gives you a glimpse into what investors need to know about the summer’s events.

“Relatively calm.” These two words pretty much sum up the summer from an investor’s perspective. The summer did not provide any major events nor was there any market-shaking news from central bank meetings or data disclosures. The earnings season that began in the summer did not offer any major surprises either. However, investors’ gardens were sown with a few seeds, whose growth is worth keeping an eye on.

The battle between the USA and Europe continues

At the start of the year, investors focusing on Europe were pleased when the area’s economic data provided a positive surprise and the surprises across the Atlantic were mainly negative. During summer, however, the situation took a 180-degree turn.

The US inflation figures for June (published in July) were better, i.e. lower, than expected, and there have been positive signs about the state of the US economy throughout the summer. The US economy continued to grow briskly during the second quarter, and the recession that was expected to take place during the latter half of this year no longer seems likely. The latest employment report also revealed strong figures, and the fall of the struggling housing market seems to have come to a halt, if not to a turning point.

In Europe, the latest economic data has been gloomier than expected. This is especially true for industrial PMIs which usually provide some indication of future development. Whilst there are some minor positive signs, the state of the European economy looks grim.

Although the European and the US economies are dissimilar, the central banks on both sides of the Atlantic continued to waltz to the same tune. In their meetings held at the end of July, both the European Central Bank (ECB) and the US Federal Reserve (Fed) raised their key interest rates as expected. Both central banks were also cautious in their communications, announcing that they would make decisions based on data, which was also what the markets had been expecting.

Can US growth stocks keep driving the market rally?

Not even the hot summer could prevent the equity markets from continuing their climb. Especially US growth stocks, which suffered from high interest rates last year, have been this year’s winners. During summer, their rise stabilised as the impact of the factors that boosted growth companies and especially tech companies during the first part of the year gradually dwindled. For example, the largest fall in inflation is almost over, interest rates have risen and companies’ valuations have reached spectacular figures.

The growth sector’s performance during summer was good in Europe, too, albeit lagging behind the USA. Value stocks have also continued to show decent performance. The Helsinki stock exchange continued down a path of poor performance due to company-specific reasons. In addition, our domestic market has been weighed down by a poorly performing industrial sector, which is strongly represented in the domestic market.

In China, economic data has been weaker then expected, and the country’s recovery from Covid has been slower than hoped for. China is thus maintaining its expansionary policy stance, which has supported Chinese stocks during summer. The Japanese equity market has recently shown relatively strong performance.

The fixed income market continued to be calm during summer. For the first time in a long while, some greater volatility occurred at the end of last week when the US Department of the Treasury announced that it would issue bonds more generously than usual with the aim of covering its budget deficit.

Some interesting news was also received earlier in the week, when the rating agency Fitch downgraded the United States’ credit rating from AAA to AA+. The rating downgrade was justified by the debt ceiling adjustment carried out in early summer, during which the USA was already threatened by insolvency. Last time, the United States’ credit rating was downgraded in 2011 by Standard & Poor’s as a result of a similar adjustment. Now the USA is rated in the category AAA by one rating agency only. The rating downgrade may increase the USA’s loan expenses and, in addition, major investors, for example, may have rules that only allow investments in the government bonds of countries with an AAA rating. It is worth keeping an eye on the situation.


Nothing presented here is or should be taken as an investment recommendation or solicitation to subscribe for, buy or sell securities. When making investment decisions, the investor must carefully familiarise themselves with the information given on the financial instruments and understand the related risks. The investor must base their decision on their own assessment, goals and financial situation. Risk is always inherent in investment activities. The value of the investment instruments may increase or decrease. The past performance of investment instruments is no guarantee of future performance.

Show all releases and news