The week in review

The debate on the Federal Reserve’s view of inflation, and the spread of the Delta variant for COVID-19 dominated markets during the week of 28 June, as we explain in our latest update.
Published 5 July
2 mins

What’s happened in markets?

FTSE All Share-
Euro Stoxx 50-0.88-0.035.0117.1626.289.7710.63
S&P 5001.713.558.6716.7341.2119.0317.87
Japan Topix-0.220.82-0.669.6029.557.3811.78
MSCI Asia Pac.-1.83-
MSCI Emerg. Mkts.-1.66-2.091.945.9635.2511.4612.97
Jo’burg All Shares0.18-3.87-0.9613.3424.708.518.17
UK Gov’t Bonds0.691.181.37-5.50-5.933.021.96
US Gov’t Bonds0.620.921.86-2.42-2.954.742.14
Global Corp. Bonds0.621.302.28-0.743.476.854.68
Emerg. Mkt. Local Currency Bonds-0.77-1.682.83-3.854.874.943.38

Figures in the respective local currencies as at the end of trading on 2/7/2021.

Two main themes dominated markets. The first was the debate on inflation and when the Federal Reserve (Fed) would start to raise interest rates, while the second focused on the spread of COVID-19 and specifically the new Delta variant.

On the former topic, the balance the Fed needs to bear in mind with regard to future decisions was highlighted by the 2 July jobs report, which brought up the character of Goldilocks again. This – in case you needed reminding – is where the growth is strong enough to reassure investors, but not too strong to push the Fed to consider raising interest rates – i.e. along the lines of the smallest bear’s porridge/chair/bed being ‘just right’ for Goldilocks’ enjoyment. On the back of the report, equity markets were encouraged, as we saw with the S&P 500 which reached another all-time high.

Positive news for the US economy came in the form of the bipartisan US$1.2 trillion agreement to renew the nation’s physical transport (e.g. roads, bridges and rail) and digital (broadband) infrastructure, as well as help stimulate the economy. And while the bill fell short of the inclusion of climate change and social support, President Joe Biden plans to pursue his ‘human’ priorities through a bill passing through the senate using the reconciliation process, which only requires Democrats voting.

The ‘not too hot’ story continued for the flash IHS Markit purchasing managers’ composite index data. This came in for the Eurozone at 59.5 for June, up from the 57.1 in May, and only slightly higher than the 59.2 expected. The theme was echoed in the latest inflation report with the consumer price index for the trading bloc published at 1.9% for June, which again was as expected.

With regard to the latter topic, COVID-19 continues to spread, and although it is higher in markets where vaccination campaigns have been slower, cases in all main markets are higher as a result of the more infectious Delta variant. Encouragingly, however, hospitalisations and fatalities rose at a far slower pace where vaccines have limited the number of people becoming seriously ill.

In political news, 130 countries have started working on the new tax framework to bring in a new minimum corporation tax threshold of 15% standard, although there will be some way to go before this legalisation is set to be implemented in 2023. So far only nine countries have refused to sign up, including Ireland, Estonia and Hungary. Although their resistance may be moot given that all of the G20 have signed up, as have the tax havens of The Bahamas, Cayman Islands, Gibraltar and Switzerland, among others.

The week also saw the celebrations for the 100th anniversary of the Chinese communist party, marking a small meeting in Shanghai in 1921 that is considered to be the first congress of China’s only political party. The celebrations focused on its 92 million members and the 700 million Chinese lifted out of poverty, although references were made to China’s dim view of international criticism of its political choices.

Last, but not least, Facebook passed the US$1 trillion capitalisation mark after the antitrust case of its acquisition of WhatsApp was dismissed. The company was the fifth company to achieve this level, behind Apple, Microsoft, Amazon, and Google’s parent, Alphabet Inc, and follows a particularly strong period for the company in terms of the value of its shares, which hit a 2020 low of US$416.2 billion last March.

In markets, developed markets (+2%) continued to lead the way for emerging markets (-2%) over the past 30 days. Style-wise, growth stocks (+5%) continued to be in favour versus value (-1%) over the same 30 days period. Information technology (+7%) and healthcare (+5%) were the best performing sectors on this 30 day basis, versus materials (-5%) and financial services (-4%). Small capitalisation stocks posted +0% returns for the past 30 days, lagging the +2% performance of their largest peers.




UK GDP (QoQ)-1.6 -1.5
UK PMI62.261.7
UK CPI (YoY)2.1
EU GDP (QoQ)-0.3
EU PMI59.559.2
EU CPI (YoY)1.9
US GDP (QoQ)6.4
US PMI64.063.5
US CPI (YoY)5.0

What’s happened in portfolios?

Although the month of June and the first couple of days of July have seen growth stocks outperform, this is not to the same extent as in 2020 and we continue to believe in a balanced approach across this style and value. Meanwhile, we have made a switch from global passive plays to regional funds as the performance of stock markets is increasingly linked to the rollout of COVID-19 vaccinations, which allows us even greater control over our approach to asset allocation.

Falling sovereign bond yields, meanwhile, meant that returns for longer-dated corporate bonds outperformed, which has driven returns for our exposure to this sub asset class in the portfolio.

Meanwhile, the standout performer over the last three months has been BMO Commercial Property, which is up almost 30% over the period as the easing of restrictions has re-encouraged interest in the fund. And it may see further upside with the full reopening of the UK economy, which is expected on 19 July.

What's happening this week?

5 Jul • Q2 earnings’ season starts | 6 Jul • G20 meeting | 7 Jul • Fed meeting minutes released

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.


If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Sources: Nedbank Private Wealth and (1) Bloomberg; and (2) Reuters.

The value of investments can fall, as well as rise, and you might not get back the original amount invested. Exchange rate changes affect the value of investments. Past performance is not necessarily a guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios and is referenced for illustrative purposes only, not as a recommendation, not least as it may not be suitable. You should always seek professional advice before making any investment decisions.

Access more of our insights


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The week of 20 February 2023 saw stronger than expected inflation and economic growth reports and a more hawkish stance from central banks, leading to widespread declines in markets.

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