July 2018 Monthly Market Review

The US economy recorded its fastest rate of growth since 2014. July 2018 started well for the economy, with another 213,000 jobs being added (in June 2018) as the economy’s growth streak continued. GDP growth reached 4.1 annualized.

The Eurozone has shown mixed economic data, inflation came in higher than expected (2.1), but the second-quarter GDP (gross domestic product) missed expectations. July 2018 was a better month for eurozone equities as trade worries receded

The Bank of England (BoE) raised its key short-term interest rate from 0.50 to 0.75. This decision was largely expected by the markets. Sterling continued its downward trajectory in July 2018.

The Japanese market recovered to record a gain of 1.3 for the month (July 2018). The yen weakened slightly again against a generally stronger US dollar. The market was led by the commodity sector, in particular by oil & coal.

The Chinese economy had slowed slightly in the second quarter, reaching the expected 6.7, but falling slightly behind the 6.8 recorded in the first quarter.

The trade war between the United States and China has waned throughout the month, and then on 31st July US President Donald Trump ramped up the tension with proposals of a 25 percent duties on an additional $16 billion in Chinese imports. It will be the second time the U.S. has slapped duties on Chinese goods in about the past month, despite complaints from American companies that such moves will raise business costs and eventually consumer prices. China has already placed retaliatory tariffs in response to the ‘Trump Tariffs’.

In July 2018 all the major stock markets had a good month. US shares gained ground in July 2018, supported by a slew of strong company results, and ongoing strength in employment. The US econ- omy recorded its fastest rate of growth since 2014, July 2018 started well for the economy, with another 213,000 jobs being added (in June 2018) as the economy’s growth streak continued. In the second quarter of the year the economy had grown at an annualized rate of 4.1(GDP growth reached 4.1 annualized), helped by an increase in exports. The oil price declined over the month, as Russia and OPEC announced a rise in supply.

Financial and industrial stocks recovered from a difficult June (2018) 86 of S&P 500 firms beat the estimates. All sectors (except real estate) reported earnings growth in excess of 10. There was significantly less good news for Facebook. Hit by “fake news” and its users’ data, Facebook warned of slower revenue growth and increased costs (its shares fall by 19). Apple led the technology sec- tor out of a slump. Apple became the first company to reach the $1 trillion market capitalization after its stock rallied more than 8 in the two days following its earnings release.

The Eurozone has shown mixed economic data, inflation came in higher than expected (2.1), but sec- ond-quarter GDP (gross domestic product) missed expectations (expansion of 0.3 in Q2 following 0.4 in Q1). The Eurozone’s unemployment rate remained stable at 8.3, the lowest rate since December 2008. The PMI Composite index (Purchasing Managers’ Index), which is seen as a good guide to eco- nomic health, was slight. July 2018 was a better month for eurozone equities as trade worries receded. The MSCI EMU index returned 3.5. Top-performing sectors included financials, telecommunication services and utilities. European technology stocks tracked their U.S. counterpoints higher after strong earnings results from Apple.

The BoE raised its key short-term interest rate from 0.50 to 0.75 (+0.25). This decision was largely expected by the markets. Sterling continued its downward trajectory in July (2018), the british pound was down closing July (2018) at $1.3129. The FTSE-100 index was up slightly in the month. Having closed June (2018) at 7,637, it ended the month at 7,749 with a rise of just 1.

After a negative start of the month in Asia, the Japanese market recovered to record a gain of 1.3 for the month . The yen weakened slightly again against a generally stronger US dollar. The market was led by the commodity sector, in particular by oil & coal. The bank sector also performed well, driven partly by new decisions relating to the Bank of Japan’s (BoJ) monetary policy. The BoJ confirmed that rates will remain low for “an extended period of time,” and that reaching its 2 inflation target will take longer than expected.

The Chinese economy slowed slightly in the second quarter, reaching the expectated 6.7 , but falling slightly behind the 6.8 recorded in the first quarter. China’s performance was hampered by global trade tensions. The Chinese stock market got off to bad start this month, falling 2.5 after President Donald Trump declared new tariffs, but the Shanghai Composite index regained ground lost by the end of the month. This has forced the Chinese government to protect its economy against the possibility of a long trade war.

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