After a highly volatile April, the MSCI Emu Small Cap index finally closed up +2.27% in April, well ahead of the broad caps (-1.68% for the Eurostoxx50). Financial markets had to absorb the effects of Liberation Day, marked by Donald Trump's announcement of tariffs on imported goods. These duties vary from country to country, with a generalized minimum tax of 10% on all US imports, rising to much higher levels for the hardest-hit countries. After a strong reaction, tensions finally eased with the suspension of tariffs exceeding 10%, with the exception of those targeting China. This lull coincided with the start of the quarterly earnings season, which was broadly in line with expectations, although companies are struggling to provide a clear outlook due to a lack of visibility.

Within the index, the sectors that outperformed were utilities (+7%), real estate (+6%) and consumer staples (+5.7%), perceived as defensive in a context of uncertainty surrounding international trade.

Conversely, the energy sector (-3%) underperformed, penalized by falling barrel prices and downward revisions to global demand forecasts. The information technology sector (+1.2%) was affected by growing concerns over trade tensions and a possible economic slowdown. Finally, the materials sector (+0.4%) was subject to some profit-taking after a strong rise since the start of the year.

In Germany, we took some profits on Ionos and Renk in view of the sharp rise in both stocks; we bought a new position on Flatexdegiro, an online trading player whose business is currently benefiting from the high market volatility. In France, we returned to Trigano, mainly for valuation reasons, at a time when the motorhome market is logically slowing down; we lightened our position on Technip Energie to reduce exposure to the oil service sector in view of the drop in oil prices. We increased our exposure to banks by buying BCP and Banca Monte dei Paschi.

Monthly performance stands at : 2.22% compared with the Msci Emu Small cap index: 2.27%, giving a relative performance of -5 bp.

Exposure to the defense sector was again profitable, with Renk (+19%) up; German stocks benefited from the prospects offered by the vast Bilfinger stimulus plan (+12%), Ionos (+14%); German exposure also benefited Spie (+9.4%). Lottomatica gains +7.7% thanks to a defensive profile and growth linked to the extension of digital betting.

Among the detractors is Fugro (-17%), penalized by the slowdown in offshore wind energy projects and the downward revision of its growth forecasts, while maintaining its margin forecasts. Tecnicas Reunidas (-7%) is suffering from doubts about the impact of lower oil prices on oil service spending. Alten (-17%) is suffering from customers' wait-and-see attitude, with Q2 sales down 6.6%.

Inflation is normalizing; central banks have entered a rate-cutting cycle, which should breathe new life into the companies in our investment universe. The trade war launched by President Donald Trump in the United States is creating a great deal of uncertainty, but we can see that the reality principle is leading him to modify his positions. The ECB continues to ease interest rates, which remains a positive factor for the markets. In our stock selection, we prefer domestic issues, and stocks likely to benefit from European and German stimulus plans, particularly in Defense.