Global equity markets have remained resilient despite the ongoing day-to-day volatility caused by the Covid-19 pandemic and fears surrounding inflation. On 19th July, the MSCI World Net TR index suffered its biggest one-day drop since February as investors worried that a resurgence in Covid cases would delay the economic recovery. However the index still ended the month in positive territory.
One market which has been struggling recently is China. The MSCI China CNY index has lost nearly 14% during July. This is due to a series of strict new regulatory measures being imposed on companies by Chinese authorities. Among those targeted have been education firms and the Chinese tech giants – particularly those listed overseas. The NASDAQ Golden Dragon China USD Index, which comprises Chinese firms whose common stock is traded in the US, lost more than 20% in four days during the month and ended the month down 22%.
Meanwhile the US giant Amazon has been hit with a record $886.6 million fine by Luxembourg’s National Commission for Data Protection for allegedly breaking the EU’s rules on GDPR (General Data Protection Regulation). Amazon’s share price fell -7.6% on 30th July due to the news.
Full round-up of July market performance
In the UK, the FTSE 100 index moved 0.07%, while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, returned 3.24% and 1.24% respectively. Concerns continued about the impact of rising levels of inflation, a subject we recently covered. In the US, the S&P 500 USD index climbed 2.38% while in Europe the Eurostoxx 50 EUR index rose 0.75%. Japanese stocks measured by the Topix JPY index declined -2.18%.
Emerging markets were volatile during the month, with the MSCI Emerging Markets index dropping 6.05% in local currencies. Chinese equities measured by the MSCI China local index slumped 13.76% while Latin American equities, measured by the MSCI Latin America local currency index, lost 2.21%. However Indian stocks, measured by the Nifty 50 INR PR index, increased 0.26%.
In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, rose 2.77%. Long dated (over 15 years to maturity) gilts rallied 5.49%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, lifted 1.43%. In the high yield market, the Bank of America Merrill Lynch Sterling High Yield index picked up 0.42%.
Commodities mostly had a positive month. The S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, gained 1.57%. The price of a crude oil futures contract rose 0.65% while copper futures gained 4.33%. In the precious metals markets, the S&P GSCI Gold and Silver indices returned 2.35% and -2.47% in USD respectively.
In the currency markets, the pound appreciated 0.53% versus the US dollar and 0.41% against the euro but slipped 0.70% versus the yen.