Market Insights: Monthly Market Review (July 2015)Contributors Dr. David Stubbs, Global Markets Insights Strategy Team
As the temperature heated up across the northern hemisphere, investors could be forgiven for hitting the beach to avoid the negative news flow. From the Greek negotiations, the collapse of the Chinese stock market and the increasing likelihood of a Puerto Rico default, there was no shortage of things to worry about. Yet most of these events have been localised, contained and of little sustained threat to most investors’ portfolios. Indeed, away from these dramatic events, most developed economies continued to make gradual progress and the outlook for corporate earnings remained positive.
GDP growth in both the US and the UK was shown to have bounced back from the first-quarter soft patch and the debate over the first interest rate increase in both countries warmed up. Economic data out of Europe continued to improve overall, but with significant variations beyond the headline numbers. Countries at each extreme of the spectrum – the true core country Germany on one side and the true periphery countries of Spain and Ireland on the other – remained strong. Yet those countries that fall somewhere in the middle are struggling: data from Belgium and Italy, for example, showed weak growth and increasing unemployment from already elevated levels.
Given the patchy progress of the eurozone, and the muted pace of inflation across the currency bloc, continued European Central Bank (ECB) support is assured. Japan’s economic data has been a bit soft of late, but aggressive asset purchases and changing corporate culture should also support its markets.
In this month’s review, we first examine performance across asset classes before developing deeper in different countries’ equity and fixed income markets.
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The value of investments and the income from them can fall as well as rise and investors may not get back the full amount invested. Past performance is not a guide to the future.