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July Market Commentary

by Thornbridge

July Market Commentary by Levendi Investment Management – A Thornbridge Appointed Representative

July Market Commentary by Levendi Investment Management – A Thornbridge Appointed Representative

July was dominated by politics and outlook reassessments. In the US a failed assassination attempt occurred on Donald Trump at a rally, with a bullet skimming his ear. Joe Biden u-turned after continuing poor performance and dropped out of the race for another term at the White House, nominating VP Harris instead. France is battling a hung parliament, and the UK saw a landslide Labour election win. While government changes can have a great effect on markets, the Labour win was largely already priced in, as investors welcomed the relatively pro-growth party and its stability. With the combination of the aforementioned prospect of stability, a rate cut, and some pleasing M&A activity, investors seemingly pounced on the relatively cheap valuation of the UK markets, which logged a pleasing 2.5% rise for the month.

This is in contrast to European and US counterparts, witnessing increasing political tensions and as a result increasing volatility. The European markets saw a -0.43% drop and US markets a 1.13% gain. Outside of politics, a leadership rotation was happening away from the mega-cap, usually technology heavy names, towards the small caps. Protectionist and pro-business rhetoric along with inflation data coming in Fed easing territory, saw in the US for example the small cap index largely outperform the main index. The situation is bolstered by the first murmurs of a deflating artificial intelligence bubble, where investors are beginning to question the ROI on the billions invested in capital expenditure benefitting currently only a gaggle of shovel-sellers.

Author: Felix Wigdahl

Felix is a member of the investment funds team and is involved in portfolio construction, investment committees, trade execution and monitoring.

Author: Thornbridge

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