July 2023

• Global markets advanced in July as inflation continued moderating across several major economies and investors increasingly anticipated a soft economic landing.
• Technology and artificial intelligence-related sectors remained major drivers of market performance.
• Central banks continued raising interest rates, though investors expected tightening cycles to approach their peaks.
• Economic growth remained resilient despite elevated borrowing costs and slowing manufacturing activity.
• Emerging markets delivered mixed performance amid uneven Chinese recovery conditions.
• Commodity prices rebounded modestly as energy markets tightened and global demand remained stable.

Asia (ex. Japan)

Asian markets outside Japan delivered mixed but generally positive performance during July as technology-related sectors benefited from continued artificial intelligence optimism and semiconductor demand.

However, concerns regarding slowing Chinese economic growth and weakness in the property sector continued weighing on broader regional sentiment, prompting expectations for additional Chinese policy support measures.

Europe

European equities advanced during July as inflation data moderated gradually and recession fears eased across several major economies.

Corporate earnings generally remained resilient despite slowing industrial activity, while the European Central Bank continued tightening monetary policy to address persistent inflation pressures.

United States

U.S. equities continued rising during July as moderating inflation and resilient labour market conditions strengthened expectations that the economy could avoid recession despite aggressive monetary tightening.

Technology and artificial intelligence-related companies remained key market leaders, while improving earnings sentiment supported broader investor confidence.

United Kingdom

UK equities delivered modest gains during July as inflation began easing gradually from elevated levels, though interest rates and borrowing costs remained high.

The Bank of England continued raising rates to combat persistent inflation pressures, while economic activity showed signs of slowing within housing and consumer sectors.

Japan

Japanese equities remained strong during July as accommodative monetary policy, improving corporate profitability and continued foreign investor interest supported market performance.

The Bank of Japan adjusted elements of its yield curve control framework slightly, leading to increased market attention regarding future policy normalisation prospects.

Emerging Markets

Emerging markets delivered mixed results during July as technology-oriented economies benefited from semiconductor demand and improving global risk sentiment.

However, weaker Chinese growth and concerns surrounding property market conditions limited broader optimism across many emerging economies.

Commodities

Commodity prices rebounded modestly during July as oil markets tightened due to production cuts from major exporters and resilient global demand conditions.

Industrial metals remained relatively subdued due to weak Chinese property activity, while gold prices traded within a stable range as investors balanced moderating inflation against elevated interest rates.