July 2018

• Global markets recovered modestly in July 2018 as corporate earnings remained strong and trade tensions stabilised temporarily.
• U.S. equities reached new highs led by technology and consumer sectors.
• European and Japanese markets remained more subdued due to export concerns.
• Emerging markets stabilised after earlier volatility.
• Oil prices remained elevated despite supply increases.
• Investor sentiment improved modestly across global markets.

Asia (ex. Japan)

Asian equities outside Japan stabilised during July as investors became more optimistic regarding trade negotiations and Chinese policymakers introduced measures to support growth.

Technology demand remained supportive for Taiwan and South Korea, while Chinese authorities increased fiscal and monetary support measures to stabilise economic activity.

Europe

European equities recovered modestly during July as trade tensions eased slightly following negotiations between the United States and European Union.

Economic growth remained positive though softer than earlier in the year. Export-oriented sectors remained sensitive to global trade developments.

United States

U.S. equities advanced strongly during July as earnings season exceeded expectations and economic growth accelerated sharply in the second quarter.

Technology and consumer sectors led gains, while the Federal Reserve maintained gradual tightening expectations amid robust economic conditions.

United Kingdom

UK equities posted modest gains during July as energy and commodity sectors remained supportive. Brexit negotiations continued creating periodic volatility in sterling and domestic equities.

The Bank of England prepared markets for another interest rate increase amid relatively stable inflation and labour market conditions.

Japan

Japanese equities stabilised during July as global trade concerns eased slightly and corporate earnings remained supportive.

The Bank of Japan adjusted elements of its yield curve control policy while maintaining highly accommodative financial conditions overall.

Emerging Markets

Emerging markets stabilised during July as dollar strength moderated and Chinese policy support improved sentiment.

However, several economies remained vulnerable to higher U.S. rates and tighter global financial conditions.

Commodities

Commodity prices remained mixed during July. Oil prices stayed elevated despite increasing supply from major producers.

Industrial metals stabilised after earlier weakness, while gold prices remained subdued due to higher U.S. interest rates.