Introduction

Global markets posted mixed results in July 2024 as economic data began to show signs of slowing momentum while monetary policy remained broadly accommodative. U.S. earnings season produced better-than-expected results, but rising concerns about growth sustainability and renewed geopolitical tensions created headwinds. Investor focus shifted toward the pace of forthcoming rate cuts, the strength of consumer demand, and the resilience of corporate margins amid a softer macro backdrop.

United States

U.S. equities were largely flat in July. The S&P 500 finished unchanged, while the Nasdaq Composite edged down 0.6% after a strong Q2 run. The earnings season began on a positive note, with several large-cap firms reporting resilient profits and improved forward guidance. However, macroeconomic data softened, with July's nonfarm payrolls showing a smaller-than-expected increase and consumer sentiment beginning to waver.

The Federal Reserve held rates steady, reaffirming its intention to cut later this year, with September still seen as the most likely starting point. Inflation continued to ease gradually, with the June CPI (reported mid-July) falling to 3.0% headline and 3.2% core. The 10-year Treasury yield closed at 4.28%, after briefly dipping below 4.20% during the month.

Europe

European equity markets lost ground in July. The Euro Stoxx 50 declined 1.9%, pulled lower by weakness in industrials and financials. Political instability in France and renewed pressure on Italian bonds weighed on investor confidence. The eurozone's composite PMI fell below 50, signaling contraction, while consumer confidence continued to deteriorate in core economies.

The European Central Bank left rates unchanged after its June cut, and policymakers struck a cautious tone regarding additional easing. Headline inflation dipped to 2.1% while core inflation held at 2.6%. Bond markets remained stable, with bund yields closing the month near 2.25%.

Asia-Pacific

Asian equities advanced in July, led by Japan and China. The Nikkei 225 rose 4.1% to new record highs, supported by a weaker yen, strong earnings from exporters, and persistent foreign inflows. The Bank of Japan maintained its policy settings, with the market now expecting a modest rate hike in Q4 amid rising wage growth and sticky services inflation.

In China, the Hang Seng Index gained 6.3% and the Shanghai Composite rose 3.7%, driven by better-than-expected Q2 GDP growth of 5.4% and new targeted fiscal measures. Beijing focused on boosting household consumption and easing credit conditions in the property sector. Australia's ASX 200 declined 0.8% after mixed earnings and hawkish remarks from RBA officials tempered hopes of imminent rate cuts.

Emerging Markets

Emerging markets showed mixed performance. The MSCI Emerging Markets Index rose 1.5%, led by Asia and the Middle East. Risk sentiment was supported by lower global yields and sustained capital inflows into EM equity and debt markets.

India's Nifty 50 was flat as investors awaited the Union Budget and signals of fiscal consolidation. Brazil's Bovespa fell 2.2% as inflation ticked higher and political noise re-emerged. Meanwhile, South Africa and Turkey posted modest gains as their currencies stabilised and central banks maintained hawkish stances to anchor inflation expectations.

Commodities

Oil prices rallied. Brent crude ended the month near USD 91/barrel, the highest since October 2023, amid falling U.S. inventories, strong summer demand, and geopolitical tensions in the Persian Gulf. OPEC+ reaffirmed its supply targets, while traders priced in tight market conditions into Q3.

Gold held steady around USD 2,400/oz, supported by continued central bank demand and U.S. real yield moderation. Copper pulled back slightly by 1.7%, after three strong months, as traders took profit and watched for further Chinese stimulus announcements.

Fixed Income & Currencies

Bonds were stable overall. The U.S. 10-year yield ended near 4.28%, with the curve remaining slightly inverted. Credit markets held firm, with spreads remaining narrow across both investment-grade and high-yield indices.

The U.S. dollar was range-bound. The euro softened slightly due to regional political risk. The yen continued to weaken, prompting warnings from Japanese officials. The Singapore dollar was stable, while select EM currencies - particularly the Brazilian real and Indian rupee - faced mild depreciation due to domestic uncertainties.

Outlook

As Q3 progresses, investors remain focused on the timing of central bank easing, the durability of consumer demand, and corporate profit margins. While the macro environment remains supportive overall, risks around fiscal slippage, geopolitics, and uneven global growth persist.

Brightness Capital & Asset Advisory remains selectively constructive across asset classes, with a bias toward quality equities, short-duration credit, and real assets. We continue to monitor shifts in rate expectations, FX volatility, and global liquidity as key drivers of risk-adjusted returns heading into the second half of 2024.