July 2024 Update
F&A Monthly Update | JULY 2024
We hope this message finds you in good spirits. As part of our ongoing commitment to keeping you in the loop, it's time for our monthly update! These updates provide a quick glimpse into market insights from PortfolioMetrix, giving you an overview of where your investments are headed. Here's your July 2024 update!
Sending love
Richard and the F&A team
July 2024 Update
This month's piece is compiled by Brendan de Jongh, SA Head of Research - PortfolioMetrix.
GLOBAL UPDATE
In July, markets delivered mixed results across different asset classes. Global bonds performed well as yields fell, driven by softer-than-expected economic data from the US, including a decline in the Consumer Price Index (CPI), which measures inflation. These lower-than-expected inflation figures led investors to anticipate that the US Federal Reserve might cut interest rates sooner than expected. Equities showed regional variation in performance: UK stocks surged, bolstered by the positive market response to the Labour party's general election victory, while US stocks dipped slightly due to disappointing earnings from large tech companies. However, smaller US companies fared better, buoyed by the expectation of rate cuts. Meanwhile, real assets, such as property and infrastructure, demonstrated strong returns as they are viewed as more stable investments that benefit from lower interest rates, which reduce borrowing costs and increase asset values.
LOCAL UPDATE
The local stock market locked in another strong month of gains as upward momentum, following the outcome of the recent election, continued to support flows from local and offshore participants. SA bonds followed the same trend, continuing a strong rally as foreigners bought R19.7bn worth of SA debt instruments in July. The Monetary Policy Committee (MPC) decided to hold the repo rate unchanged at 8.25% at its July meeting. The decision was not unanimous, however, and two of the six members voted for a cut of 25bps, indicating that the start of a rate cutting cycle may be sooner than previously expected. Market expectations are for a 25bp cut in September as inflation slowly ticks towards the central bank’s midpoint target.