European equity markets rose early but ended flat during earnings season.
Sir Keir Starmer became prime minister of the UK as Labour secured 412 seats.
The US economy grew 2.8% in the second quarter of 2024.
June was a mixed month for global equity markets. European equities started strong but ended flat as second-quarter earnings reports began to come in. In the UK, the market finished higher, lifted by positive economic data and the Labour Party's historic return to power after 14 years. Across the globe, US, Asian, and emerging markets saw gains, with Australia standing out with impressive performance. Fixed income markets also had a strong month, with global government bonds experiencing notable gains.
European equity markets rose early in the first part of the month but ended flat as earnings season began. Technology and consumer discretionary sectors declined, while utilities, real estate, and financials posted gains.
Eurozone inflation rose from 2.5% in June to 2.6% in July, while core inflation stayed at 2.9%, and core services fell from 4.1% to 4.0%.
National data indicates eurozone Gross Domestic Product (GDP) slowed in the second quarter of the year, with July surveys suggesting further easing. Spain led growth (+0.8%), followed by France (+0.3%) and Italy (+0.2%). Germany's GDP contracted (-0.1%).
The UK equity market closed higher in July, buoyed by positive economic data and Labour’s return to power after 14 years.
Sir Keir Starmer became prime minister as Labour secured 412 seats. The Conservatives lost over 200 seats, ending their 14-year rule. The Liberal Democrats and Reform UK gained seats, while the Scottish National Party (SNP) lost 38 of its 47 seats.
UK economic growth was 0.4% in May, up from flat growth in April, driven by strong services and housebuilding, potentially reducing the likelihood of an August rate cut.
US equity markets rose as the US Federal Reserve (Fed) signalled interest rate cuts, with the S&P 500 ending positively. Real estate and utilities led the advancements.
US consumer-price index inflation fell from 3.3% to 3% in June, below the 3.1% expectation, prompting bets on two rate cuts this year. Fed Chair Powell stated that there has been “considerable progress” in managing inflation.
The US economy grew 2.8% in the second quarter of 2024 gross domestic product coming in higher than the 2% forecast that economists had been expecting.
Asia Pacific equity markets posted a positive month, led by Australia, India and Singapore. Taiwan and Korea lagged as technology stocks dropped following a sell-off in their US peers.
Chinese equities gained slightly as financials advanced. GDP grew 4.7%, below expectations, while the People’s Bank of China cut interest rates to stimulate the economy.
Japanese equities fell, led by information technology. The central bank raised rates to 0.25%, following a 2.6% consumer price index (CPI) rise.
Emerging equity markets posted a positive month. The strongest performing markets were India and Singapore, while China, Taiwan and Korea detracted.
In Latin American markets, Brazilian equities rose on signals of a US Federal Reserve rate cut, despite rising inflation. Meanwhile, the Mexican stock market has been volatile, driven by uncertainty surrounding the US elections in November. However, it finished the month in positive territory.
Equity markets in India gained with information technology and consumer discretionary sectors having a strong month.
Government bond markets had a strong month, with US Treasuries, UK gilts, and German bunds returning 2.23%, 1.87%, and 1.60%, respectively.
Eurozone inflation unexpectedly rose from 2.5% to 2.6% in July, exceeding the European Central Bank’s (ECB) 2% target for three years, but did not reduce expectations of a September rate cut.
Corporate bond markets performed well, led by government bonds. Dollar-denominated bonds returned 2.36%, followed by sterling and euro bonds at 1.94% and 1.71%
Yields remain attractive and may maintain positive relative value
Significant focus on the uncertainty of the US macroeconomic backdrop and its potential implications on the market remain top of mind for investment opportunities. Against this cautious outlook, we asked the experts from Invesco’s bank loan, direct lending and distressed credit teams to share their views as the third quarter of 2024 wraps up.
Private credit: A case for senior loans
As we continue in 2024, there has been a significant focus on the uncertainty of the US macroeconomic backdrop and its potential implications for the senior secured bank loan market. Despite these challenges, we see three compelling reasons to consider investing in senior secured loans now.
Emerging market local debt | Monthly macro insights
Catch up on monthly fixed income insights from our emerging market local debt team.
Monthly fixed income update
Fixed income markets in July saw yields rally in response to weaker economic data which brought forward expectations of rate cuts. Read our latest thoughts on how fixed income markets performed during the month and what we think you should be looking out for in the near term.
Global Fixed Income Strategy Monthly Report
In our regularly updated macroeconomic analysis we offer an outlook for interest rates and currencies – and look at which fixed income assets are favoured across a range of market environments.
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.
Views and opinions are based on current market conditions and are subject to change.
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.
EMEA3774905/2024
