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July global commentary: DM equities record a solid start to 2H25

Developed market (DM) equities had a solid start to the second half of the year (MSCI World Index +1.3% MoM), nudging global equity market returns into the double-digits YTD (+11.2%). Mega-cap tech stocks were leading from the front again (Bloomberg Magnificent 7 Index +5.8% MoM), with chipmaker, Nvidia (+12.6% MoM) the star performer amongst that cohort, aided by US President Donald Trump’s announcement that he would lift a ban on supplying AI chips to China and its Magnificent Seven peers saying that they would be accelerating their AI capex spend.

Alphabet, Meta and Microsoft (8.7%, 4.8% and 7.3% MoM, respectively) all saw their share prices rally after delivering positive earnings surprises. Tesla was the cohort’s worst performer (-8% MoM) as the company reported one of the worst quarterly results in over a decade (EPS -53% YoY) on the back of the removal of US subsidies for electric vehicles (EVs), which impacted earnings. CEO Elon Musk told investors that they should anticipate “a rough few quarters” until the autonomous driving profits scale, likely towards the end of next year. Chinese stocks (Shanghai Composite +4.5% MoM) led emerging markets (EMs) higher (MSCI EM +2% MoM), with EM stocks still comfortably ahead of their DM peers YTD (+17.9% vs +11.6% YTD).

US Federal Reserve (Fed) members voted to keep US central bank rates on hold (at 4.25% to 4.5% p.a.) at their July meeting (as largely anticipated). The hawkish tone from Fed Chair Jerome Powell, following the meeting, left investors questioning whether they would get more than one rate cut for the remainder of the year. The US dollar rallied after the Fed meeting, leaving it in positive territory against all major currency peers in July (US Dollar Index +3.2% MoM), breaking a losing streak of six consecutive negative months for the US Dollar Index. Reduced expectations for Fed cuts drove the US government’s 10-year funding rate 0.15% higher, leaving it at 4.38% p.a. at month-end.

The price of crude oil spiked into month-end (+7.3% MoM), pushing it to US$72.53/bbl as Trump hardened his stance towards Russia, threatening restrictions and tariffs on the country’s energy exports. Iron ore (+10.6% MoM) recovered YTD losses on optimism about Chinese housing market support.

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WEBINAR | The Navigator – Anchor’s Strategy and Asset Allocation, 2Q24

Anchor CEO and Co-CIO Peter Armitage will host the webinar, provide an introduction to current global and local market conditions and give his thoughts on offshore equities. Together with Head of Fixed Income and Co-CIO Nolan Wapenaar, Pete will also discuss Anchor’s strategy and asset allocation for 2Q24, focusing on global equities and bonds. In addition, Fund Manager Liam Hechter will provide insights into local equities, highlighting some investment ideas; Global Equities Analyst James Bennet will discuss Ferrari and give an update on Tesla, and finally, Analyst Thomas Hendricks will participate in a Q&A with Peter, explaining the 10-year US Treasury to attendees.