Fund Commentary
July saw some heavy falls as a re-escalation of tensions between the US and Iran led to a spike in energy prices with oil rebounding sharply to over $100 at one point. The mid-June ‘memorandum of understanding’ peace deal only lasted until the 8th when Trump declared it over following Iranian attacks on ships in the Strait of Hormuz the day before. Later in the month, concerns over future AI earnings and returns led to a sharp technology related sell-off as analysts once again started to look at where future profits might be derived. This was compounded by forced deleveraging across investors from hedge funds to retail. While the MSCI all country World index fell -1.6%, there were big divergences between technology heavy benchmarks and those with a higher energy and financials composition. The S&P 500 was down -1.8% compared to the Nasdaq’s -8.1%. Japan’s Nikkei 225 fell – 7.7% whereas the broader Topix index actually rose +0.6%.
Major central banks left interest rates unchanged at their meetings in July. There were dissenters at the Bank of England and Federal Reserve though who unsuccessfully voted to raise rates. Government bond yields moved higher (meaning prices fell) though as investors reacted to the higher energy prices and economic data to take a more hawkish view that inflation and rates would be higher for longer. The Bank of Japan kept rates unchanged at 1%, despite investor focus on inflation, and the weak yen prompted warnings that action may be taken.
Broad commodities rose +5.8% during July with oil prices jumping +21.6% as hostilities rose again across the strait of Hormuz. They fell back towards $90 as tensions eased somewhat. Precious metals were largely flat as gold rose slightly while silver fell a little, as investors pondered diversification once again over concerns for geopolitics, inflation and interest rates.
The US market was supported by second quarter earnings that were better than expected although earnings growth is still concentrated in the technology and communication service sectors. There was significant rotation in sectors though away from technology and the Nasdaq100 fell into correction territory by the end of the month.
Asian markets experienced similar rotations. Taiwan and Korea saw volatility surge on semiconductor valuation concerns. The Korean KOSPI index fell -17.6% in July, led by SK Hynix dropping -31.1% and Samsung -17.6%. Taiwan was less badly hit at a mere -9.3%! Indian sentiment struggled on higher oil price pressures, but the index was nearly flat at -0.2%.
The Bank of England left interest rates unchanged while monitoring the inflation levels. UK equities were the standout performer +3.5% as they benefited from financials responding to a higher interest rate environment and energy related outperformance combined with a low technology weighting. Andy Burnham officially became prime minister and decided on his cabinet. European corporate earnings exceeded expectations and equities were only slightly down, -0.8%, as investors responded to the rotation into energy and financials along with positive GDP numbers.
Congratulations to Spain for winning the world cup that was presented to them by Donald Trump. He had just returned from a Nato summit where he renewed his calls for US control of Greenland. The next day, his decision to impose 50% tariffs on most Canadian goods, led to Canada cancelling the joint opening ceremony of the Gordie How international bridge between Windsor, Ontario, and Detroit, Michigan. They decided to celebrate the opening but not hold an event between the two countries.
All performance figures are in GBP unless otherwise stated.
Monthly data as at: 31/07/2026.
