Monthly Market Roundup

Summary 

Global markets posted gains in July, supported by easing trade tensions, resilient corporate earnings, and selective policy support. European and UK equities rebounded despite weak growth and persistent inflation, while the US outperformed on strong GDP data and optimism around tax reform. Asia Pacific markets saw broad-based strength, led by China, Japan, and South Korea, though India lagged. Emerging markets were mixed, with ASEAN equities rising on trade deals, while Brazil struggled amid inflation concerns and geopolitical tensions. Fixed income markets declined as hawkish central bank commentary weighed on government bonds, though corporate bonds delivered positive returns.

Europe

European equity markets rebounded in July, recovering some of the losses from June. The rally was driven by strong earnings in the financial sector and rising oil prices, which supported energy stocks. In contrast, technology underperformed due to weaker Q2 results. On the macroeconomic front, Eurozone GDP growth slowed sharply to just 0.1% quarter-on-quarter, with Germany and Italy contracting. Spain stood out with robust growth, while France saw a modest upside surprise. Inflation held steady at the European Central Bank’s 2% target, supported by lower energy costs and a stronger euro. The ECB kept interest rates unchanged, adopting a cautious stance amid ongoing global trade tensions. A key development was the EU-US trade deal, which settled around a 15% tariff rate higher than expected. While some sectors, like autos, saw tariff reductions, the EU committed to significant strategic purchases and investments in the US, reflecting a pragmatic political compromise under challenging conditions. 

The UK

UK equities ended July on a positive note, with the FTSE 100 surpassing 9,000 points, supported by strong corporate earnings. However, the broader economic picture remained challenging. UK inflation rose unexpectedly to 3.6% in June, driven by higher fuel and transport costs, while core inflation also increased, adding pressure on the Bank of England despite slowing growth. The economy contracted for a second consecutive month, with a 0.1% fall in May following a 0.3% decline in April, as weakness in the production sector offset gains in services. Labour market conditions softened, with unemployment rising to 4.7% and vacancies falling, alongside easing wage growth, signalling a cooling jobs market and reinforcing expectations of rate cuts later this year. 

The US

US equity markets rallied in July, outperforming global peers as optimism around tax reform and easing trade tensions lifted investor sentiment. Gains were broad-based, led by the technology sector, which continued to benefit from strong AI-related demand. The US economy grew at an annualised rate of 3% in Q2, beating expectations, driven by favourable trade dynamics. However, weak jobs data and persistent inflation rising to 2.7%, fuelled market bets on Federal Reserve action in September. Although the Fed held rates steady, dissenting votes and cautious commentary signalled growing pressure for a cut. Despite mixed indicators, consumer confidence and services activity improved, reinforcing the view of a resilient but uneven recovery. 

Asia

Asia Pacific equities ended July in positive territory, though performance varied across markets. Gains in China, Japan, and South Korea were driven by optimism around trade negotiations and strength in the technology sector. Chinese equities rose as authorities pledged to curb excessive market competition and support industrial upgrades, despite ongoing deflationary pressures. Japan benefited from a new US–Japan trade deal and strong corporate earnings, although political uncertainty weighed on sentiment. South Korea rallied on corporate governance reforms and a major semiconductor contract win by Samsung. Taiwan also advanced, led by tech and renewables. In contrast, Indian equities underperformed, dragged down by weak results in financials and lingering trade uncertainty, though the auto sector found support from a new UK–India trade agreement. 

Emerging Markets

Emerging market equities posted gains in July, supported by strong performance across ASEAN markets. Thailand, Indonesia, and Singapore rallied on the back of agreed trade deals, robust earnings, and supportive policy moves, including interest rate cuts and better-than-expected GDP data. Chinese tourist arrivals and optimism around US trade discussions further lifted sentiment in Thailand. In contrast, Brazilian markets slipped as escalating tensions with the US and a surprise rise in inflation weighed on investor confidence. Turkish equities advanced following a central bank rate cut and a renewed commitment to disinflation, with broad-based gains across financials, industrials, and consumer sectors. India saw modest declines, dragged down by weak financials and lingering trade uncertainty, although the auto sector benefited from a new UK–India trade agreement.

Fixed Income

Interest rates were held steady in both the US and eurozone, but government bonds declined as hawkish-leaning comments from Federal Reserve Chair Jerome Powell and ECB President Christine Lagarde led investors to reassess the likelihood of near-term rate cuts. US Treasuries, German bunds, and UK gilts all posted negative returns for the month. The US economy showed resilience, growing at an annualised rate of 3% in Q2, while inflation rose to 2.7%. A new trade agreement between the US and EU introduced a 15% import tariff on most EU goods, with Brussels making the bulk of concessions. In the UK, inflation rose to 3.6% in June, but with the economy contracting and signs of labour market weakness emerging, markets remain confident that the Bank of England will cut rates in August. Corporate bond markets delivered positive returns, led by high yield and supported by strong investor demand.

Read previous editions

• July cov. June 2025
• June cov. May 2025
• May cov. April 2025