Highlights;

  • Following the sell-off in equities after the UK’s Brexit decision, equities staged a strong recovery in July, helped by expectations of more central bank stimulus measures in the major economies.

  • Crude oil prices fell 14% on renewed concerns about oversupply.

  • China economic data continued to show that the government stimulus measures are supporting the economy.

  • US economic data was somewhat mixed. June non-farm payrolls figures recovered from the very low reading in May but GDP growth in the second quarter was slower than expected.

  • Economic data in Europe has continued to be fairly good with moderate economic growth but recent business and consumer surveys in the UK point to a sharp slowdown in activity in the coming months.

  • Australia’s economy is in reasonably good shape with consumers and businesses finding conditions reasonably good but weak inflation and wages growth have prompted the RBA to cut interest rates again to 1.50% in early August.

Global economies

July was a strong month for equities as investors shrugged off the UK’s decision to leave the European Union and companies reported better than expected earnings in the US and Europe.  Over the month most of the economic data painted a picture of moderate economic growth, falling unemployment and strong housing construction activity.

US

In the United States, non-farm payrolls rose by 287,000 jobs in June, reversing the very weak reading in May, and more in line with the 200,000 monthly average jobs over the past few years

Europe

The Euro area economy grew 0.3% in the June quarter, in line with market expectations. Annual growth in GDP did, however, slip marginally to 1.6% year-on-year from 1.7% in the prior quarter.

China

The economy continues to perform reasonably well, supported by government stimulus measures and construction activity. GDP grew at 6.7% in the June quarter, slightly ahead of expectations.

Asia Region

Japanese economic data continues to show that the economy is struggling to generate growth. Industrial production is down 1.9% over the past year, real household spending is 2.2% lower over the past 12 months and inflation is still in negative territory.

Australia

The RBA announced a 25 basis point cut in Australia’s cash rate to a record low of 1.5 headline inflation in the June quarter was in line with market expectations.

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