Market Pulse - July 2022

• Market Pulse
• 11.08.22
• ILIM

Key themes

• Stocks and bonds rallied in July as a perceived policy pivot from the US Federal Reserve (Fed) led markets to lower interest rate expectations, pricing in interest rate cuts in early 2023.
• The US Fed and European Central Bank (ECB) delivered 0.75% and 0.50% interest rate hikes respectively as they sought to bring inflation back to their 2% targets.
• The euro fell below parity against the US dollar intra-month as risks to the eurozone economy were heightened by an ongoing weaponisation of Russian energy supplies and political uncertainty in Italy.

Markets snapshot

• The MSCI AC World equity index rose 7.1% (9.7% in euros).
• European equities rose 7.0% (8.0% in euros).
• UK equities underperformed, rising 3.5% (6.4% in euros); energy and commodity stocks were relatively weak as oil and commodity prices fell over the month.
• Japan rose 4.0% (8.4% in euros) as weakness in the Japanese yen supported equity markets.
• The Pacific Basin rose 2.8% (6.5% in euros) as concerns over Chinese growth weighed on the region.
• The Eurozone >5-year bond index rose 5.9% as yields fell on intensifying growth fears and comments from the US Fed on potentially slowing the pace of rate hikes.
• The euro fell -2.5% against the dollar to 1.022 as risks to the eurozone economy were heightened by an ongoing weaponisation of Russian energy supplies and political uncertainty in Italy.
• Commodities were flat (2.5% in euros), bringing their year-to-date return to 35.7% (51.4% in euros).
• Crude oil was down -6.8% amid slowing global growth.
• European gas rose 32.1% as Russia cut supplies via Nord Stream 1.
• Gold fell -2.4% as risk appetite returned to markets following a perceived policy pivot by the US Fed.