Market Commentary

World markets had a muted July, despite enjoying support from strong corporate earnings in the US, as well as easing trade tensions, and better investment sentiment across regions. This still did not assuage concerns regarding uncertainty about the direction of trade policies as well as high margin US debt, which is now exceeds US$1trillion. These concerns notwithstanding, growth globally remains resilient, with the IMF raising its growth projections from around 2.7% to 3.0%, on the back of stronger projections for the US, China, and Europe.

The S&P 500 hit new highs for six consecutive days in July, and despite losing ground around month end, it still ended higher by 2.2%. The Nasdaq closed the month higher by 3.7%, while the Dow was the US laggard, ending the month higher by only 0.1%. On the economic front, US June headline inflation as measured by CPI, accelerated to 2.7% YoY vs the May print of 2.4%, while core CPI, which excludes food and energy, printed at 2.9%, up slightly from the 2.8% print in May. The Fed’s preferred inflation gauge, personal consumption expenditure (PCE), rose by 2.8% YoY which was unchanged from May.

US GDP rebounded for the second quarter of 2025, growing at an annualised 3.0%, after having contracted by 0.5% in the first quarter of 2025. US data is somewhat distorted, however, by the large swings in international trade as both business and consumers braced themselves and then reacted to the Trump Tariffs, with imports surging due to pre-tariff stockpiling. US consumer spending remained modest as fixed investment growth weakened, casting doubts on the sustainability of the rebound especially with the concerns regarding the risk of policy uncertainty, weak private sector demand, and tariffs persisting. At its 30 July meeting the Fed kept rates unchanged, with Chairman Jerome Powell reiterating that US rates are in the right place to enable the managing of the uncertainty around tariffs and inflation, which had the effect of tempering the expectations for a September rate cut.

In the UK, the FTSE 100 rose by 4.2% for the month, as UK inflation accelerated to a higher than expected 3.6% YoY compared to the 3.4% YoY printed in May, with core inflation rising 3.7% YoY vs the 3.5% YoY May reading. On the trade front, goods exported from the UK fell to a record low of 40.8% of total exports in May, down from approximately 65% in 2000, while services led by finance and consulting climbed to 59.2%. This highlights Brexit related barriers, global demand changes and the long-term pivot from the UK away from manufacturing, raising concerns that a continued weakness in exported goods could weigh on growth and weaken an already precarious fiscal situation.

European markets also had a strong July, as trade tensions, mixed economic data, as well as geopolitical risks continued to weigh. The Dax rose 0.7% for the month, with the CAC up 1.7%. On the economics front, inflation in the Eurozone for June printed at 2.0% YoY, compared to the 1.9% YoY print in May, and in line with the ECB’s 2.0% inflation target. Core inflation for the period remained unchanged at 2.0%. On the tariffs front, the US reached an agreement with the EU to impose a 15% tariff, lower than the 30% threatened, but still well above the 1.2% average preceding President Trump’s second term. As a quid pro quo the EU’s committed to invest in the US and buy US energy products. The high stakes trade compromise reached sees the US applying the tariffs on 70% of the EU exports valued at €780 billion, which includes key sectors like autos, semiconductors, and pharmaceuticals. On the back of this, the EU avoided direct retaliation, and committed to buy US$750 billion in US energy, invest US$600 billion in the US economy and open more of its agricultural market. Although the deal prevented a deeper rift, the reaction in Europe was mixed, and the rhetoric from EU commission president, Ursula von der Leyen, emphasised that the agreement offered both stability and predictability to European and American companies and should hold for the remainder of Trump’s presidency.

Asian markets trended higher as US/Sino trading tensions eased, supporting broader investor confidence. In China, the Shanghai Composite Index climbed by 3.7%, with the Hang Seng up by 2.9%. This was driven largely by China’s stimulus efforts, and greater infrastructure spend.

On the economic front, Chinese GDP jumped 5.2% YoY for the second quarter of 2025, printing slightly ahead of market expectations. The difference was on the back of a decline in imports, boosting GDP, but which is also a sign of a weakening demand rather than economic strength. The Chinese property market continues to be a drag on the economy with key indicators showing that sector is still in decline, with sales and new housing starts having declined for three to five years. Government stimulus in the form of fixed asset investment into manufacturing and infrastructure continued to support growth albeit at a slower pace than in the first quarter of 2025.  Trade tensions continue to cast a shadow over Chinese growth as both the EU and US are intensifying efforts to reshape their trade relationships with China. Trade negotiations between the EU and the US resumed in July highlighting the desire for a reduced reliance on Chinese supply chains. The EU is weighing increased tariffs on alleged subsidised Chinese exports, with the US looking to use the trade agreements to curb Chinese market dominance. This suggests a shift in the trade architecture that is increasingly shaped by strategic rather than economic concerns. On the economics front, China’s manufacturing PMI shrank more than expected to 49.3 in July, compared to the June print of 49.7, while the non-manufacturing PMI, which includes construction and services, also fell to 50.1 from 50.5.

The Japanese market ended higher by 1.4% for the month, with headline inflation declining to 3.3% YoY compared to the May print of 3.5% YoY, in line with expectations, and still above the BoJ’s 2% target. On the back of soaring living costs, including a doubling of rice prices, Japan faces a turbulent political and financial July, as the Liberal Democratic Party suffered an historic electoral defeat on the 20^th of July, losing both parliamentary houses for the first time since 1955. On the back of this political uncertainty, ripples in the bond market saw demand at the 40-year bond auction hitting a 14-year low. On the day of the bond auction, Japan also struck a deal with the US securing tariff reductions as well as agreeing to open its markets to American autos and rice. While offering relief, the deal further unsettled long-term bond investors wary of the fiscal strain ahead.

South Africa

On the local market, the JSE All Share Index breached the 100 000 level on July 23^rd for the first time, closing the day at 100 179.84. The bourse retraced those gains to close the month at 98 519.51, ending up 2.2% for the month. Resources were the leading light, up 5.1% for the month, followed by property, up 4.4% for the month, financials up 1.4% and industrials up 1.1%. The best performing shares for July were Adcock Ingram, up almost 37% on the back of a takeover announcement by India’s Naco Pharma, Sasol up 19%, Sibanye Stillwater up 18.9%, British American Tobacco up 15.8%, Telkom up 10.1%, Emira up 9.9%, Thungela up 9.7% and Northam up 9.4%.