Article Video: Inside the markets | Helping you guide clients

David Aujla narration: 

Disclosures (not being read, only showing up on screen):

Inside the markets | Helping you guide clients. David Aujla, Portfolio Manager, Multi-Asset Solutions. Data as at 31 July 2026. This video was recorded 03 August 2026. This video is for Professional Clients only and is not for consumer use.

Hello and welcome to the July edition of Inside the Markets, a deeper look at how global markets have been navigating what remains a very eventful 2026.

My name is David Aujla and I'm the lead portfolio manager for Invesco Summit and managed multi-asset fund ranges and its model portfolio service.

In July, markets saw yet another bout of rotation, with most major equity indices under pressure, while more resource-heavy markets held up much better. The US and Europe were broadly flat, Japan gave back some of the strong gains it has seen this year, and emerging markets lagged after a sharp sell-off in Korean AI and semiconductor names as part of the crowded AI winners trade was unwound by investors.

Pacific ex-Japan and UK equities outperformed, thanks to their greater exposure to energy and resource sectors, which benefited from higher commodity prices. Overall within equities, energy and financials led while technology lagged. That said, large-cap companies still reported solid earnings, including many of the mega-cap US companies that have been under pressure and are associated with AI and technology.

Year to date, broad ex-US equity exposure and US equal-weight indices are ahead of headline mega-cap dominated US indices such as the S&P 500.

On the macro side, renewed US-Iran tensions pushed oil and other energy prices sharply higher again, reversing some of the earlier relief from talk of a peace deal and putting inflation firmly back on investors' radars. Shipping risks around key choke points added to that volatility, and those energy price moves fed directly into market assessments of how long central banks might need to keep policy restrictive.

Currency markets were also unsettled. The yen saw sharp moves, prompting officials to step in and stabilise it, while the US dollar remained firm as investors weighed geopolitical risks and the prospect of higher-for-longer interest rates.

July was a busy month for central banks. The Federal Reserve, European Central Bank, Bank of England and Bank of Japan all met, with most choosing to hold rates steady but facing growing pressure from hawkish voices concerned about the persistence of inflation.

In the US, the Federal Reserve kept its target range unchanged, although three members voted for a rate hike. In the UK, the Bank of England vote shifted further towards tightening, with more members favouring an increase than earlier in the year.

A key development was the Federal Reserve's evolving communication style under new Fed Chair Warsh. He reiterated that the 2% inflation target is non-negotiable but offered very limited forward guidance on the timing or size of future moves, leaving markets more reliant on incoming data and subtle shifts in tone.

Government bonds lost ground over the month as higher energy prices and the combination of hawkish rhetoric but limited policy action pushed yields higher across the curve. Long-dated bonds were hit particularly hard, reflecting investors' reassessment of where interest rates may need to remain given renewed inflation risks.

Credit markets proved more resilient, with spreads relatively contained. However, hopes for an imminent easing cycle have been pushed further out, keeping duration risk central to fixed income return potential, even as starting yields look more attractive than they have for much of the past decade.

Elsewhere, real assets and commodities reflected the same macroeconomic backdrop. Broad commodities and energy-linked exposures benefited from higher oil prices and renewed geopolitical risks, while global listed real estate delivered respectable gains as investors looked for inflation resilience and income-producing assets.

Taken together, July reinforced three key themes for the year so far. First, diversification beyond US mega-cap growth has been rewarded. Second, higher energy prices and less forward guidance from central banks mean bond yields may remain under pressure and market volatility around economic data is likely to persist. Third, portfolios tilted towards genuine regional diversification, a balance of cyclical and defensive exposures, and thoughtful management of areas such as duration, real assets, and large- and small-cap equities may be better placed to navigate the current environment than those relying on a narrow set of crowded exposures.

Thank you for taking the time to watch this month's review. I hope you found it useful and, as ever, please do get in touch if you have any questions. I'll see you next month.  

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important information

Data as at 31 July 2026

This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

Views and opinions are based on current market conditions and are subject to change.