Market Pulse - July 2019

Key themes

  • First US rate cut in a decade

  • Central banks in Europe and Japan tread water

  • Trade – here we go again

  • Has the risk of a no-deal Brexit risen?

Markets snapshot

  • The MSCI AC World equity index rose 1.0% (2.6% in euro terms) over the month.

  • US equities rose 1.5% (3.9% in euro terms), as the Fed signalled (then implemented) a rate cut.

  • UK equities rose 2.1% (0.4% in euro terms) although returns were weaker in euro terms as a result of Brexit-related sterling weakness.

  • Eurozone >5-year bonds rose 2.4%, with German 10-year yields falling to new all-time lows of -0.44% at month-end as data disappointed and the ECB indicated that rates could be cut.

  • Although Spanish 10-year spreads were stable during the month, Italian spreads fell to 198bps due to the resolution of the ongoing fiscal dispute with the EU.

  • The euro fell to 1.107 against the US dollar, as eurozone data disappointed while US data rebounded, resulting in markets pricing in fewer US rate cuts.

  • Commodities fell -0.2% (2.1% in euro terms) with West Texas Intermediate (WTI) oil up 0.2% as rising tensions between the US and Iran countered slowing demand fears.

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Market Pulse

Market Pulse - July 2019

Each month, our Chief Economist, Lenny Mcloughlin, sifts through market noise to pinpoint the key themes that have influenced markets – and impacted your investments. Lenny also shares his insights on the forces shaping markets in the short-to-medium term.

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