July in review

July was a month of contrasts, with a strong first half offset by a weak second. The narratives remained familiar, with markets initially buoyed by the lowest US inflation print since March 2021. This led to growing anticipation that the US Federal Reserve (Fed) would cut interest rates by its September meeting. However, sentiment towards risk assets began to turn at the midway point of the month. A combination of weak economic data from China, including missed GDP forecasts and slowing retail sales, combined with underwhelming earnings from some of the mega-cap tech stocks, brought about some sharp downward moves.  

Emerging markets lagged their developed peers on the back of the Chinese data, and concerns around demand led to commodity prices losing ground, with declines among energy prices, industrial metals and agricultural goods. The UK proved a bright spot, despite the weakness in commodities. At a sector level, the prospect of rate cuts lifted real estate and utilities stocks, while IT and communication services – the year’s standout performers – found themselves at the bottom. 

Source: Bloomberg, for the month ending 31 July 2024.