Developed market equities performed well across the board in July. All major indices finished in positive territory, barring the Nasdaq, as central banks begin to soften their stance on higher interest rates. The Nasdaq was dragged down by the US tech sector, as earnings results and expectations disappointed. The consideration by central banks to cut policy rates had a positive effect on global bonds, which outperformed equity in US dollar terms. Emerging markets lagged, as China’s GDP numbers came in weaker than expected due to poor domestic demand and increased tariffs offshore. The People’s Bank of China announced a rate cut in an attempt to stimulate the struggling economy.
South Africa outperformed both emerging and developed markets across asset classes. Bonds continues to rally, as political risks which had been priced in didn’t come to fruition. The Government of National Unity is thus far stable, giving investors more confidence. Local equities rode this wave of positivity, as all three major sectors increased. Financials gained as the probability of rate cuts increased, while resources were helped by the increase in the price of gold.
- The JSE All Share closed higher (up 3.9%) for its fifth consecutive month, starting the second half of the year on the right foot.
- Financials (up 5.4%), Industrials (up 2.0%), and Resources (up 5.5%) all contributed positively to the broader bourse.
- Small-caps (up 5.4%) and mid-caps (up 5.1%) rocketed higher, and large-caps (up 3.7%) followed close behind.
- The S&P SA REIT sector (up 3.9%) and the SA Listed Property sector (up 4.4%) each gained, as local growth-on continued.
- SA Nominal Bonds (up 4.0%) strengthened, and Inflation Linked Bonds (up 1.6%) inched higher
- Developed Market Equities trounced their Emerging Market peers in US Dollar terms, with the MSCI World Index up 1.8% and the MSCI Emerging Market Index closing slightly over the zero line, up 0.4%.
- The Rand had a mixed month, as sentiment towards South Africa remained positive, the dollar weakened and the pound gained ground. Relative to the US Dollar (Rand appreciated 0.4%), the Euro (Rand depreciated 0.6%) and the Pound Sterling (Rand depreciated 1.2%).
- Commodities were another mixed basket in July. Gold (up 4.2%) rose higher, while Platinum (down 2.0%) dropped, and Brent Crude (down 6.6%) sold off.
Source: Factset
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