Monthly Market Review
July 2024
July 2024 saw healthy performance across local and global markets, driven by easing inflation and favourable economic policies in some regions. This review analyses the key market movements, best and worst-performing stocks, and significant economic events that shaped the financial landscape during the month.
LOCAL MARKETS
Exhibit 1 | Local performance (ZAR) for July 2024
Note: Data illustrated in ZAR. Source: FundFocus. Data as at 31 July 2024. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.
South Africa
Economic Events
- The South African Reserve Bank (SARB) maintained the repo rate at 8.25% during its July meeting, although there was a split decision with two members favouring a rate cut.
- South Africa’s trade surplus increased to R24.2 billion in June 2024, the largest surplus since May 2022.
- South Africa’s inflation eased slightly to 5.1% year-on-year in June from 5.2% in May. Core inflation decreased marginally to 4.5% year-on-year.
Equity Markets
The FTSE/JSE All Share Index (ALSI) returned 3.92% in July, while the Capped SWIX increased by 4.09%. Over the last three months, the FTSE JSE All Share Index gained +9.2%, marking the best three-month performance since January 2023. Small caps led the performance with a return of 5.44%, followed by mid-caps at 5.09% and large caps at 3.70%.
All major sectors posted positive returns, with Resources (RESI10) at 5.65%, Financials (FINI15) at 5.15%, and Industrials (INDI25) at 1.68%. Top-performing segments included Consumer Staples at 7.23% and Healthcare at 6.58%, while Technology and Telecommunications lagged at -1.35% and -2.79%, respectively.
Best performing equities
- Anglo American Platinum: +17.4%
- Gold Fields: +16.7%
- British American Tobacco: +13.9%
Worst performing equities
- MTN: -6.9%
- Anglo American: -4.3%
- Bidvest: -3.9%
The stark difference between the best and worst-performing stocks highlights the need for expert guidance in building a diversified portfolio. With top performers like Anglo American Platinum and Gold Fields delivering strong returns, and laggards like MTN and Anglo American seeing significant losses, it is clear that skilled stock picking is crucial for mitigating risks and ensuring stable returns.
Bond Markets
The All-Bond Index (ALBI) rose by 4.02%, with significant contributions from the 12+ years segment (5.12%) and the 7-12 years segment (4.14%). Nominal bond yields decreased, with the R2030 and R2048 yields dropping by 57 basis points and 52 basis points, respectively. Inflation-linked bonds (CILI) returned 1.82%, and the IGOV returned 1.88%.
GLOBAL MARKETS
Exhibit 2 | Global performance (USD) for July 2024
Note: Data illustrated in USD. Source: RMB. Data as at 31 July 2024. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.
United States
Inflation and Federal Reserve Actions
In June, inflation moderated to 3.0% year-over-year, down from 3.3% in May. The Federal Reserve kept interest rates unchanged, with market participants anticipating a potential rate cut in September. Investors expect a 0.25% rate cut at all three remaining Federal Reserve meetings in 2024.
Market Performance
The S&P 500 posted a gain of 1.1%, the Dow Jones increased by 4.4%, while the NASDAQ 100 declined by 1.6%. The 10-year US Treasury bond yield fell by 37 basis points to 4.03%, reflecting the moderation in inflation.
Stock Performance
The “Magnificent 7” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) experienced a 2% month-over-month decline in July. In contrast, the remaining 1,423 stocks in the MSCI World Index collectively rose by 3% month-over-month.
Best performing stocks
- Mohawk Industries: +41.8%
- Stanley Black & Decker: +32.2%
- R. Horton: +27.7%
Worst performing stocks
- DexCom: -40.2%
- CrowdStrike Holdings: -39.5%
- Edwards Lifesciences: -31.7%
This dramatic disparity illustrates that investors risk substantial losses without skilled stock picking and strategic diversification. Relying on financial experts can help navigate these market turbulences, balancing potential rewards with minimised risks.
Trade Tensions
The announcement of President Biden’s withdrawal from the US election increased the potential for US-China trade tensions. This geopolitical uncertainty has raised concerns among investors about future market stability.
Europe
Mixed performance in European markets: the Euro Stoxx 50 fell by -0.3%, while the UK’s FTSE 100 rose by 2.5%, Germany’s DAX 30 by 1.5%, and France’s CAC 40 by 0.7%. The European Central Bank (ECB) previously cut interest rates by 25 basis points in June. The Bank of England (BoE) kept rates steady.
United Kingdom
The FTSE 100 led European indices with a 2.5% return, driven by gains in value-oriented sectors and strong corporate earnings. Despite mixed signals from inflation data and central bank policies, investor sentiment remained positive. The BoE maintained a cautious stance, contrasting with the ECB’s recent rate cut.
Asia
China’s CSI 300 managed a positive return of 0.6%, while the Hang Seng Index declined by -2.1%, the Nikkei 225 by -1.2%, and the Shanghai Composite Index by -1.0%. Recent Chinese economic data, including second-quarter GDP and June retail sales, were worse than expected, dampening market sentiment.
Conclusion
July 2024 saw strong market performances driven by easing inflation and favourable economic policies. In the US, inflation moderated to 3.0% year-over-year, leading the Federal Reserve to maintain interest rates, with potential cuts expected.
The S&P 500 and Dow Jones gained, while the NASDAQ 100 declined. The “Magnificent 7” tech giants saw a slight downturn, but the broader MSCI World Index rose. In South Africa, equity and bond markets performed well, with the Reserve Bank keeping rates steady amidst easing inflation.
Geopolitical uncertainties, like increased US-China trade tensions, added complexity. As global markets continue to navigate complex economic landscapes, continued vigilance and strategic investment decisions will be crucial in navigating the evolving market landscape.
Fund performance as at 31 July 2024
Source: OIG, FundFocus. Data as at 31 July 2024. Past performance is not indicative of future performance.
Source: OIG, FundFocus. Data as at 31 July 2024. Past performance is not indicative of future performance.
