Market Summary

Global Equity

Strong rotation during July in equity markets

Global equity markets delivered mixed returns in July as investors rotated between sectors rather than driving the market broadly higher or lower. The month was characterised by a shift away from some of the year’s strongest-performing growth companies towards sectors that are more closely tied to the economic cycle. This rotation reflects investors reassessing valuations while seeking opportunities in areas where earnings prospects have improved.

The Energy sector was the strongest performer, rising 12.3%, supported by higher oil prices. Financials also delivered a strong return of 6.4%, benefiting from resilient economic conditions and an interest rate environment that continues to support bank profitability. In contrast, Information Technology was the weakest sector, declining 5.6%. After leading global markets for much of the past year, many technology companies experienced profit-taking as investors became more selective following a period of strong gains.

Overall, July was a reminder that leadership within equity markets changes over time. While technology companies remain important long-term growth drivers, investors increasingly looked beyond the sector during the month, favouring Energy and Financials instead. This highlights the importance of maintaining a diversified portfolio, as different sectors tend to perform well at different stages of the economic and market cycle.

Global Fixed Income

High inflation fears cuts hopes for lower interest rates

Global government bond yields generally moved higher during July, particularly in the United States, as investors became less confident that central banks would begin cutting interest rates in the near term. Stronger-than-expected economic data, combined with renewed inflation concerns stemming from higher oil prices, led investors to demand higher yields on longer-term government bonds.

The increase in yields was most pronounced in longer-dated bonds, with the US 10-year Treasury yield reaching its highest level in over a year during the month. Higher bond yields resulted in modest negative returns for many government bond markets, as bond prices move inversely to yields.

Despite the increase, credit markets remained relatively resilient, supported by healthy corporate balance sheets and a stable economic backdrop.

Overall, July highlighted the continued sensitivity of bond markets to inflation and monetary policy expectations. While investors continue to expect interest rates to decline over the longer term, the timing of those cuts has become less certain, resulting in higher bond yields and increased volatility across global fixed income markets.

Commodities

Geopolitical risk and macroeconomic outlook continue to drive commodities

Commodity markets delivered mixed returns during July, with energy outperforming precious metals. The month was shaped by changing expectations for global economic growth, inflation and geopolitical developments, which affected commodity prices differently across the market. Overall, investors favoured commodities linked to economic activity, while demand for traditional safe-haven assets was more subdued.

Oil was the standout performer during the month, with Brent crude prices rising as geopolitical tensions in the Middle East renewed concerns about potential supply disruptions. Although global oil inventories remained adequate, the risk of interruptions to exports from the region pushed prices higher, supporting the share prices of energy companies.

Gold experienced a more subdued month. As investor confidence improved and bond yields remained elevated, demand for gold as a safe-haven asset softened. Higher interest rates also reduced the appeal of holding a non-income-producing asset such as gold, resulting in relatively modest price movements despite continued geopolitical uncertainty.

Platinum traded in a relatively narrow range during July. While the metal continued to benefit from expectations of a structural supply deficit and improving demand from the automotive sector, gains were limited by concerns over slower industrial activity in some major economies. Overall, platinum ended the month little changed, reflecting a balance between supportive long-term fundamentals and cautious investor sentiment.

Currencies

US Dollar gains on strong economic data

Currency markets were relatively stable during July, although the US dollar strengthened modestly against most major developed-market currencies as investors scaled back expectations for near-term US interest rate cuts. Stronger US economic data and higher Treasury yields continued to support demand for the dollar.

The euro weakened slightly against the US dollar as economic growth in the Eurozone remained subdued and investors anticipated that the European Central Bank would maintain a more accommodative monetary policy than the US Federal Reserve. Similarly, sterling lost some ground against the dollar, despite resilient UK economic data, as markets became more cautious about the outlook for UK growth and inflation.

The Japanese yen remained one of the weakest major currencies during the month. The wide gap between Japanese and US interest rates continued to encourage capital outflows from Japan, although expectations that the Bank of Japan may gradually normalise monetary policy helped limit further depreciation.

Overall, the US dollar remained well supported during July, underpinned by relatively strong economic fundamentals and higher interest rates. While currency movements were generally modest, the dollar’s strength continued to act as a headwind for international assets denominated in other major currencies.

South Africa

Naspers and Prosus drive SA Equity, while local bonds suffer due to higher inflation fears

South African equities gain 1.2% during July. Naspers (+5.7%) and Prosus (+7.8%)  were some of the major contributors. Naspers and Prosus experienced a volatile month as global technology stocks came under pressure, largely reflecting changes in investor sentiment towards Tencent, their largest investment. Strong annual financial results released at the end of June demonstrated continued growth in the group’s operating businesses and improving profitability, while the ongoing share repurchase program continued to unlock shareholder value by reducing the discount to net asset value. Although concerns around technology valuations weighed on sentiment during parts of the month, improved confidence in Tencent’s capital allocation and Prosus’ operational progress helped support both share prices as July progressed.

MTN declined approximately 10% during July, one of the major detractors, as investors became increasingly cautious about the group’s near-term earnings outlook. Sentiment was weighed down by concerns over slowing revenue growth and margin pressure in the South African business, while uncertainty surrounding earnings recovery in several African markets and continued foreign exchange risks also dampened investor confidence.

The South African 10-year government bond yield increased during July, rising from approximately 8.4% at the end of June to around 8.7–8.8% by month-end, resulting in a negative return for bond investors. The rise in yields was driven by several factors; higher global bond yields, an increase in SA inflation expectations, and hence reduced expectations for SARB rate cuts.

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