The month started with interest rates driving the narrative, and then it was politics and the Paris Olympics.
The UK and France saw significant political shifts, with Labour winning the UK general election and President Macron calling a snap election in France. These events, particularly the latter, impacted the financial markets.
President Biden's age finally caught up with him after he messed up the presidential debate. Then, when Trump survived assassination and Democratic party support openly waned as polls tanked, Biden's days were numbered, and he handed the next presidential baton to his Vice President, Kamala Harris.
As John Authers writes, "As far as markets are concerned, these shocking developments have cancelled each other out'.
The US economy demonstrated its resilience, growing at 2.8% in the second quarter, above the expected 2%. This performance, stronger than traders had anticipated, provided a sense of stability in the market.
In the UK, with the election shenanigans over and one party winning a clear majority, the Bank of England now appears set to cut interest rates later on 1 August. In Europe, the ECB kept the rates steady, having reduced its deposit rate the previous month to 3.75%, but second-quarter growth expectations surpassed expectations, outweighing German contraction.
In equities, the S&P 500 hit 5,500 for the first time and, by the end of the month, was +1.1%. Tech stocks, notably Microsoft, were scrutinized as markets digested the extent and ramifications of the Crowdstrike IT outage. But the tech story remained largely solid, with some strong guidance towards the end of the month that particularly benefited Nvidia. Despite this, the Nasdaq closed down -0.8%.
In Europe, the Dax was +1.5% and the FTSE 100 +2.5%, primarily supported by better-than-expected corporate updates, reasonably stable politics (post election) and belief that an interest rate cut is immediately imminent. In Asia, the story was more nuanced, with the Nikkei 225 -1.2% and the Shanghai Composite Index still struggling to make any ground -1.0%
Commodities came under pressure this month, and by close, the Bloomberg Commodity Index was down -4.0%. Numerous commodities had a difficult month, including oil, with Brent -6.6% and WTI -3.7%, although both picked up on the last day as Middle Eastern tensions ratcheted up. Precious metals was more mixed with gold proving a safe haven, +7.3%, and silver started to lose its lustre, -1.4%.
Cryptocurrencies had a strong month, partly due to the return of Trump, who publicly backed them. And while Bitcoin came under pressure on the last day of the month, it still closed +6.1%.