Commentary by Rob Oellermann  – Portfolio Manager of the MI THORNBRIDGE GLOBAL OPPORTUNITIES FUND

Global markets tracked higher again in July, led by strong equity indices with the MSCI ACWI Index returning 2.5% in GBP for the month. Resilient corporate earnings reports were delivered across a range of sectors, but notably including the large US technology shares that have led the headline indices gains throughout 2023. This resilience underpinned investor risk appetite despite tighter monetary policy.

The US Federal Reserve raised US rates a further 25bps to 5.5% (resuming tightening after a pause at their previous meeting and marking the highest level of rates since 2001), closely followed by the ECB which also lifted rates 25bps to 3.75%. However, there was a welcome softening in inflation momentum in the US June CPI data and other inflation indicators such as core PCE inflation and wage growth indicators like the ECI continue to point to a moderation in the inflation outlook.

Looking ahead, the US Fed emphasised data dependence when guiding to further interest rate changes. This emphasis led many market participants to see this level as the peak of the Fed’s current hiking cycle.

Author: Alex Hackett

Alex is a Business Development Manager and a member of the investment funds team and is involved in portfolio construction, regulatory reporting, trade surveillance and monitoring.

Author: Thornbridge