Global Asset Allocation Team Market Update – July 2024

Global equity markets extended their winning streak in June, with the MSCI All Country World index rising 1.9%. The S&P 500 (+3.5%) led the global charge thanks to the downward move in treasury yields that invigorated the unrelenting rally across the technology space (the Nasdaq jumped 6.2%). The MSCI gauge of emerging market stocks also advanced 3.5%. By contrast, the S&P/TSX (-1.8%) suffered under the weight of underperformance in the heavyweight resources and financials sectors, while the MSCI EAFE shed -1.7%. 

Fixed income markets generated positive results last month. Treasury yields edged lower following reports of cooling growth and inflation that saw traders solidify around a Federal Reserve rate cut at the September gathering. The 10-year treasury yield fell 10 basis points to 4.40%, while the policy-sensitive 2-year yield declined by 12 basis points to 4.75%. Similar moves were seen in Canada as investors braced for further monetary easing from the Bank of Canada. For the month, the Barclays US Aggregate Bond Index rose 0.9%, while the FTSE Canada Bond Universe gained 1.1%. 

The US dollar (DXY) rose +1.1% on the back of some hawkish-leaning rhetoric from Federal Reserve officials who have cautioned that further evidence that the disinflationary trend is intact will be required before pivoting to cuts. Political angst in Europe also sparked demand for the safe haven currency and weighed on the euro. The greenback strengthened against all of its major peers, with the euro (-1.2%), pound (-0.8%), yen (-2.2%), and Canadian dollar (-0.4%) all retreating last month. 

Finally, oil capped a monthly gain, with the market gripped by turmoil in the Middle East that has helped to place a floor under prices. Copper fell to a two-moth low on the back of weak demand prospects from top consumer China – while gold advanced alongside the latest decline in treasury yields that buttressed the appeal of the non-interest-bearing metal. 

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