July’s investment market commentary

Investors enjoyed a good start to the second half of the year, with most markets generating positive performance in July, despite economic concerns over the spreading COVID-19 Delta variant, and the regulatory crackdown in China, which Tom Caddick’s update discusses.
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Published 11 August
3 mins

Investors enjoyed a good start to the second half of the year, with most markets generating positive performance in July. Despite concerns over economic growth as a result of the spreading COVID-19 Delta variant, and the regulatory crackdown in China, sentiment was supported by the continued accommodative monetary policy stance of most major central banks (despite rising inflation) and strong corporate earnings results. 

Recent regulatory reforms in China took the market by surprise and caused a sharp selloff in Chinese and emerging market equities. Concerns about the unpredictability of Chinese regulations was really brought to the fore when they banned after-school private education companies from making a profit, and from accessing capital markets. This change was on the back of other reforms announced earlier in the month impacting internet and property companies. Some market participants say that these seemingly sudden shifts were actually sign-posted in China’s most recent five year plan, and are partly aimed at making it cheaper for couples to have children, by putting downward pressure on high property and education costs. Whatever the reason, China will be well aware that they cannot be too aggressive or too disruptive in terms of regulatory (non-market based) changes if they want to achieve their broader investment and growth targets.

Corporate Q2 earnings results were generally very positive. Figures out of the US showed that over 90% of the 195 companies that had so far reported exceeded expectations by around 20%. Earnings results were strong across all sectors, but it was especially pleasing to see the most COVID-19 impacted sectors showing real signs of recovery. While prospects remain encouraging, the challenge for corporates going forward is continuing this momentum in the second half of the year when fiscal stimulus measures, which have support consumer demand, are scheduled to end in many countries.

Global equity markets were overall positive (+0.7%), but that masked a big divergence between developed (+1.8%) and emerging market equities (-6.1%), with the latter falling sharply on the back of the regulatory changes in China. Concerns around the impact on economic activity of the more contagious COVID-19 Delta variant, meant cyclical sectors lagged more defensive or stay-at-home stocks. This was also reflected in the underperformance of value versus more growth orientated stocks.

Within fixed income markets, government bonds generated the best returns, with treasuries and gilts rallying over 2%. The decline in government yields over the month was as a result of several factors including dovish central bank rhetoric, widespread market belief that high inflation is mostly transitory, and uncertainty over the COVID-19 Delta variant. Given this backdrop, the more interest rate sensitive and defensive investment grade credit unsurprisingly outperformed high yield in July.

In terms of  ‘real assets’, property markets increased strongly over the month with the global real estate investment trusts (REIT) index up +2.6% over the period. Commodities also posted good returns, helped by the weaker US Dollar, with industrial metals (+4.0%) up the most, although gold (+2.3%) and crude oil (+1.6%) also posted solid gains in July.

FTSE 1007022.61


DJ Ind. Average34529.45


S&P Composite4204.11


Nasdaq 10013686.51










£ Base Rate0.1


Brent Crude69.32




This month’s values quoted as at 30/07/2021. The above values are sourced from Bloomberg and are quoted in the relevant currency.

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


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

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned here may not be suitable, and is included for information only and is not a recommendation. You should always seek professional advice before making any investment decisions.

about the author

Tom Caddick

Tom Caddick

Tom joined Nedbank Private Wealth as its chief investment officer in March 2021. Prior to joining, Tom was at Santander Asset Management in London for nine years, where he was, most recently, chief investment officer for the UK business and previously global head of the multi asset division. He has over 20 years’ investment experience, including several years as head of multi manager and fund selection at LV Asset Management.


Tom’s responsibilities include heading the London-based investment team, and chairing both the International Strategy Committee and the International Investment Committee. Tom is also part of the international investment team for Nedgroup Investments, a sister company of Nedbank Private Wealth.

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