Macro Briefing: 22 July 2024

* US presidential race set to tighten with VP Harris on track to replace Biden
* Stock market’s laggards have sprung to life in recent days as tech stumbles
* People’s Bank of China unexpectedly cuts short-term policy rate
* Tight oil market is set to fade in 2025, predicts Morgan Stanley
* Sovereign wealth funds turning bullish on emerging markets, survey shows:

The rally in small-cap stocks is part of a broader move to enhance portfolio diversification, says an ETF analyst. “What we’re seeing is a diversification trade,” Dave Nadig tells CNBC. “We’re seeing flows into everything, and that to me means people are looking to get a little bit broader in their exposure which is smart in an election year.” He adds: “If we have a sustained rally in small caps, and by sustained, I mean, like we have two or three months where small caps of all varieties are clearly beating the pants off large caps, then I think you’ll see a ton of money chase that performance that always happens.”