Monthly Market Commentaries

Overall global equities gained in July, with the best performing markets being Japan and the UK. However, emerging and Asian markets struggled. Furthermore, the best returns were achieved by companies that were value oriented and smaller in nature, which subsequently outperformed larger growth companies

Asian and emerging markets performed strongly in Q2 2024 and subsequently outperformed developed markets. Stocks related to Artificial Intelligence (Al) also continued to perform strongly. The European Central Bank (ECB) cut interest rates, but persistent inflation meant that other major central banks, such as the US Federal Reserve (Fed) and the Bank of England (BoE), kept interest rates on hold. In aggregate, global bond yields rose over Q2, which meant prices fell.

Ongoing investor optimism about the economic outlook was supportive to most risk assets in May. Developed market equities rose in May and outperformed emerging markets.

Investors also now anticipate that US interest rate cuts may come later than in other regions, such as Europe and the UK. Despite investors continuing to anticipate interest rate cuts, bond yields, in general rose, which led to a fall in price. However, there was regional divergence in bond markets, with some markets seeing gains.

With the exception of the UK, developed market equities fell in April as market expectations of interest rate cuts in the US receded. However, Emerging market equities, including China, produced positive returns in April. Global bond prices fell as yields rose.

It was a strong first quarter for global equity markets. Most markets registered strong gains as the US economy remained resilent and is unlikely to enter recession. Furthermore, equity returns were fuelled by the clamour for Arificial Intelligence stocks.Whilst expectations of interest rate cuts also initially boosted equities. However, as the quarter passed, it became more likely that the pace of cuts would be slower than investors had hoped for at the start of 2024. These interest rate cut expecyations meant that global bonds posted negative returns in the quarter, with yields rising and prices falling.

Global stock markets gained in February with emerging markets performing strongly as Chinese shares experienced a rebound. US equities also continued their upward trend, with the S&P 500 Index achieving record high closing levels during the month.

By contrast, global bond yields generally rose, which meant prices fell as investors pushed out their expectations of when central banks will cut interest rates.