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July 2024 market review: International
Oil is likely to remain volatile in the coming months, while Middle East tensions remain a wild card.
Global market performance:
July was an interesting month. There was a large retracement in technology stocks with a rotation out of the Magnificent 7 into US small cap stocks, reflected in the 1.6% decline in the Nasdaq 100 and a 10.1% rise in the Russell 2000. This is despite a growing number of companies missing forecasts in recent quarters, especially at the revenue line with stress particularly evident among smaller companies.
Oil is likely to remain volatile in the coming months. While deteriorating demand conditions call for lower prices, planned OPEC+ supply cuts will likely offset higher output from non-OPEC+ members. Middle East tensions remain a wild card.
US economic outlook and Fed policy:
US yields fell on the back of lower-than- expected US CPI data and overall slower economic data. US 2-year yields were down 50bps to 4.26% and US 10-year yields fell 37bps to 4.03%. The Fed signalled at its 31 July meeting that it was highly likely to cut rates at its 18 September meeting, which would be its eagerly awaited first cut
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