Nathalie Burrows, Editor, EBnet

 

Asset manager, 27four, have released their marketing commentary for July, looking at both global and domestic markets. The noteworthy points of context to keep in mind when considering your retirement fund’s investment performance over the last month are:

 

Around the world

 

• In developed markets equities have underperformed bonds for the first time in months. The reasons for this are: lower than expected returns on big tech companies, concerns about growth and political uncertainty in the US.
• The MSCI World Index (the index that tracks broad global equity-market performance) returned a modest 1.7% for the month.
• Bonds had a strong month – the Bloomberg Global Aggregate Bond Index rose 2.76% in July, underpinned by falling inflation and expectations of central bank rate cuts.

 

In the US

 

• Increased investor concerns around tech-stocks, which have dominated performance over the last two years, has led sell-off of these in favour of non-tech stocks, particularly small cap stocks.
• Analysts predict an overall growth rate for the year of 10.9%.
• Volatile political dynamics also influenced US markets in July – with an attempted assassination attempt on Donald Trump and Kamala Harris stepping up as the Democratic Party’s presidential candidate (replacing Joe Biden). These have largely calmed down.
• The Fed (the central bank of the US) is expected to cut rates in September, and some optimists are even thinking there’ll be multiple rate cuts in the US this year still.
• US recession concerns eased in July as second quarter GDP growth exceeded expectations.

 

In the UK

 

• The UK economy continued to grow in July.
• Positive inflation trends were also experienced in the UK and the Eurozone, and economists are cautiously predicting that the Bank of England will cut rates in August.

 

In China

 

• China’s already soft economy lost further momentum in the middle of the year.
• The economic data continues to show sluggish consumer demand.
• Political risks, particularly the expectations for the US presidential elections in November, are adding to the volatility, with MSCI China down 2.19% for July.

 

In South Africa

 

• July saw the All Share Index up 3.92%, the All Bond Index up 3.96% and the All Property Index up 4.54%.
• This upward momentum was driven by the positivity on the newly elected government’s early initiatives and a stable electricity supply.
• Headline inflation for June was 5.1% (down from 5.2% in May) and is heading towards the South African Reserve Bank’s (SARB) mid-point target of 4.5%.
• Interest rates are still high at 8.25% as consensus is the SARB is waiting for the Fed to cut rates.
• The S&P Global South African PMI (Purchasing Managers Index) dropped to 49.2 in June (from 50.4 in May). This points to a contraction in the private sector.
• Business confidence is up and overall the South African GDP for the second quarter of 2024 is expected to be stronger.

 

You can read 27Four’s full report by clicking on the image below.

 

 

ENDS