July 2016

• Global markets rebounded strongly in July 2016 as central bank support and reduced immediate systemic fears following Brexit helped restore risk appetite.
• Equities recovered sharply from June lows, with developed markets leading gains despite ongoing political uncertainty in Europe.
• The Bank of England delivered a package of easing measures, reinforcing expectations of continued monetary support in the UK.
• European equities were supported by resilient economic data and continued ECB stimulus, while Japan benefited from renewed fiscal and monetary expectations.
• Emerging markets rallied as the U.S. dollar stabilised and commodity prices recovered modestly.
• Oil prices rose from June lows as supply concerns and improving sentiment supported the energy sector.

Asia (ex. Japan)

Asian markets outside Japan posted strong gains in July as global risk sentiment improved following the immediate aftermath of the Brexit referendum. Investors regained confidence as major central banks signalled readiness to provide additional stimulus if required, helping to stabilise capital flows across the region.

China remained relatively stable, with policymakers maintaining supportive liquidity conditions to ensure orderly financial markets. Elsewhere in the region, export-oriented economies such as South Korea and Taiwan benefited from improving technology demand and stabilising global trade expectations. India continued to perform well, supported by strong domestic consumption and easing inflationary pressures.

Europe

European equities recovered strongly in July after initial Brexit-related volatility in June subsided. Markets were supported by resilient economic indicators, continued European Central Bank asset purchases and improved investor confidence in the region's ability to manage political uncertainty.

Financial markets stabilised further as concerns over immediate contagion from the UK referendum result eased. Sovereign bond yields remained extremely low, while the euro fluctuated against major currencies as investors balanced safe-haven demand with expectations of prolonged monetary accommodation.

United States

U.S. equities advanced in July as strong corporate earnings and improving economic data outweighed lingering global uncertainty. Employment growth remained solid and consumer spending continued to support the broader economic expansion.

The Federal Reserve maintained a cautious stance, with expectations for interest rate increases pushed further into the future due to global risks. Treasury yields remained low, while equity markets benefited from reduced volatility following the immediate Brexit shock.

United Kingdom

UK markets stabilised in July following the sharp post-referendum volatility in June. Equities rebounded strongly, supported by expectations of further monetary easing and a weaker currency environment that benefited multinational exporters.

The Bank of England delivered a comprehensive stimulus package in August expectations were already building during July, including likely rate cuts and additional liquidity measures. Sterling remained under pressure but stabilised somewhat as markets adjusted to the new policy outlook and reduced immediate uncertainty.

Japan

Japanese equities rose in July as investor expectations increased for further policy action from both the Bank of Japan and the government. The yen strengthened slightly in periods of risk aversion but stabilised as global sentiment improved.

Anticipation of additional fiscal stimulus and monetary easing supported market confidence, while corporate earnings remained sensitive to currency movements and global demand conditions. Investors continued to monitor policy signals closely for further support measures.

Emerging Markets

Emerging markets rallied in July as improved global risk sentiment, stabilising oil prices and a weaker U.S. dollar supported capital inflows. Commodity exporters benefited from the rebound in energy prices, while importers saw improved inflation dynamics.

China remained a key stabilising force, with ongoing policy support helping to maintain market stability. India and several Southeast Asian markets continued to perform strongly, driven by domestic demand and relatively stable macroeconomic conditions.

Commodities

Commodity markets strengthened in July, led by a rebound in crude oil prices as supply disruptions and improving sentiment helped reverse June's declines. Investors increasingly focused on potential rebalancing in global oil supply and demand dynamics.

Industrial metals also recovered modestly, supported by expectations of Chinese stimulus measures. Gold prices eased slightly as risk appetite improved, although ongoing global uncertainty prevented a sustained decline in safe-haven demand.