The Pinnacle: July 2024
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July Markets
July 2024 proved to be a month of mixed performance across global markets, influenced by varying economic data, central bank policies, and geopolitical developments. While some regions showed resilience, others faced headwinds that tempered growth expectations. Here, we provide a breakdown of the performance in major markets, with a focus on key indices and commodities.
US Markets
The US markets experienced moderate gains in July, with the S&P 500 closing the month up by 1.2%. Despite some volatility early in the month due to underwhelming earnings reports from major tech companies, the market rebounded towards the end of the month, driven by hopes of a more dovish Federal Reserve stance later in the year. Small-cap stocks outperformed significantly, with the Russell 2000 showing its best one-month performance relative to the Nasdaq 100 in over two decades .
Economic indicators painted a picture of resilience, with GDP growth supporting market optimism. However, the labour market showed signs of softening, which contributed to rising expectations of potential rate cuts by the Fed in the coming months. The bond market reacted positively, with US Treasuries gaining 2.2% as the yield curve steepened, reflecting reduced expectations of a prolonged higher-for-longer rate environment.
Eurozone
In the Eurozone, market performance was subdued compared to the US. The MSCI Europe ex-UK index rose by a modest 0.6% for the month. Economic data from the region showed a mixed picture, with some improvement in inflation figures but continued concerns over the strength of economic recovery. Inflation remains a key focus, as the ECB's cautious approach to monetary policy has left markets on edge. Despite some easing in price pressures, the overall economic momentum in the region is slower than expected, leading to a cautious outlook for the remainder of the year.
UK Markets
UK markets outperformed their European counterparts, with the FTSE All-Share index gaining 3.1% over the month. This positive performance was driven by robust service sector PMIs and stronger-than-expected GDP growth in the second quarter, which signalled improving economic momentum. The political landscape also stabilised following the Labour Party's election victory, which helped buoy investor confidence. Market participants are now watching closely for potential rate cuts by the Bank of England, expected in the coming months as inflationary pressures continue to show signs of easing.
Asia Emerging
Emerging markets in Asia faced challenges in July, particularly in China, where the MSCI China Index fell by 1.2% in US dollar terms. Continued weakness in the real estate sector and broader economic slowdown weighed on investor sentiment. In response, Chinese authorities implemented measures to provide liquidity support, including cuts to key interest rates, in an effort to stabilise the economy.
Commodities
Commodity markets experienced volatility throughout July, with the broad Bloomberg Commodity Index decreasing by 4.0% for the month. Oil prices faced downward pressure from concerns over weaker demand from China and geopolitical risks, although they showed some recovery towards the end of the month.
Gold prices, which had seen a sharp rise earlier in the year, remained relatively stable but faced upward pressure from global economic uncertainties and expectations of potential rate cuts by major central banks. Industrial metals, particularly those linked to Chinese demand, saw increased volatility as concerns over overcapacity and weaker construction activity in China loomed large.
July 2024 was a month marked by mixed market performances, shaped by regional economic conditions, central bank policies, and geopolitical developments. While US and UK markets showed resilience, the Eurozone and Asia faced more significant challenges. Commodity markets reflected the broader uncertainties, with fluctuating prices driven by both demand and supply-side factors. As we move forward, investors will be keeping a close watch on economic indicators and policy decisions that could shape the remainder of the year.
July 2024 US Election Update: Key Events and Potential Economic Implications
July 2024 was a month of significant developments in the U.S. presidential race, with major events that are likely to shape the political landscape going forward. These include the attempted assassination of former President Donald Trump, President Joe Biden’s decision to withdraw from the race, and Vice President Kamala Harris stepping in as the Democratic Party’s nominee. These events not only affect the political dynamics but also have potential economic implications that are important for investors to consider.
The Attempted Assassination of Donald Trump
One of the most shocking events in July was the attempted assassination of former President Donald Trump. The incident occurred during a campaign rally in Florida, where an assailant attempted to harm Trump before being subdued by security forces. Fortunately, Trump was unharmed, but the event has intensified security concerns around the election.
Economic Implications:
Market Volatility: The assassination attempt has introduced a new layer of uncertainty into the election process, which could lead to increased market volatility.
Increased Security Spending: The heightened security concerns are likely to lead to increased federal and state spending on security measures, particularly around campaign events and polling stations. This may provide a boost to certain sectors, such as security services and technology.
Impact on Campaign Strategies: The event may alter the campaign strategies of both parties, with a potential focus on safety, law, and order becoming more prominent. This shift in focus could influence voter sentiment and, by extension, market expectations regarding policy directions.
Joe Biden Drops Out of the Race
In another unexpected turn, President Joe Biden announced his withdrawal from the 2024 presidential race, citing personal health concerns. Biden’s decision to step down has reshuffled the Democratic Party’s plans, with Vice President Kamala Harris stepping in as the party’s presidential nominee. Biden’s withdrawal marks the end of his bid for re-election, setting the stage for a different kind of race.
Economic Implications:
Policy Continuity: Biden’s exit has raised questions about the continuity of policies his administration has championed, particularly in areas such as healthcare, climate change, and taxation. While Harris is expected to maintain many of Biden’s positions, the transition could create uncertainty about the future direction of these policies, potentially affecting sectors like healthcare and energy.
Impact on International Relations: Biden’s tenure has been marked by efforts to rebuild international alliances and manage trade relationships, particularly with China and the European Union. Harris will need to reassure international partners of her commitment to these strategies, and any perceived shifts could impact global markets, trade policies, and investor confidence.
Shift in Voter Demographics: Biden’s departure may also shift the dynamics of voter support within the Democratic Party. Harris, as the first woman of colour to be a major party’s nominee for president, may energise certain voter demographics, potentially influencing market sectors that are sensitive to consumer sentiment and spending patterns.
Kamala Harris Becomes Democratic Nominee
Harris’s nomination is historic, and her platform is expected to continue many of the policies of the Biden administration, with an emphasis on social justice, climate action, and economic equity.
Economic Implications:
Focus on Green Energy: Harris has been a strong advocate for green energy and climate change initiatives. Her nomination could accelerate investment in renewable energy sectors, impacting industries such as solar, wind, and electric vehicles. This focus may also lead to increased regulatory scrutiny of fossil fuel industries, potentially shifting the energy market landscape.
Tech and Innovation: Harris is known for her support of technology and innovation, particularly in areas like cybersecurity and data privacy. Her administration could lead to policies that foster growth in the tech sector, encouraging investment in startups and established firms that focus on cutting-edge technologies.
Social Equity Programs: Harris has consistently advocated for policies aimed at reducing income inequality and supporting marginalised communities. This could lead to expanded social programmes and increased government spending in areas such as education, healthcare, and housing, potentially influencing markets tied to these sectors.
Conclusion
The events of July 2024 have undeniably reshaped the U.S. presidential race and introduced new variables that could affect both political and economic landscapes. From the attempted assassination of Donald Trump to Joe Biden’s withdrawal and Kamala Harris’s historic nomination, each event carries significant implications for market stability, investor confidence, and economic policy directions.
As the election approaches, stakeholders will need to closely monitor these developments and consider their potential long-term impacts. While some uncertainty may be seen in the short-term outlook, the eventual outcome of the election will set the tone for economic policy and market dynamics in the years to come.
Sources
J.P. Morgan Asset Management, July 2024 Market Review
EY US Economic Outlook, July 2024
CMS Prime Monthly Market Update, July 2024
Capital Economics Commodities Chart Pack, July 2024
Euromonitor Commodity Market Outlook Q2 2024
CNN Politics
The New York Times
The Wall Street Journal
Reuters
Bloomberg News