In July, global stock market recorded a remarkable rebound amid fading fear on monetary policy tightening in US. SP500 rallied by 9.1% to 4130. DAX was up by 5.5% to 13484. China market moderated after two months outperformance. HSI corrected by 7.8% to 20157. SHCOMP went down by 4.3% to 3253. Commodity prices remained weak. Copper price slumped by 4.8% to $7918. Gold price moved down by 2.3% to $1766. Oil price underperformed, plunged by 6.8% to $105.76. Aluminum price rose slightly by 1.8% to $2489.
Global economy continued to slow down. Global PMI dropped to 51.1 from 52.2. By regions, US PMI moderated to 52.8 from 53.0. Eurozone PMI went down to 49.8 from 52.1. China PMI also eased after two months recovery, fell to 49.0 from 50.2 as pend-up demand started fading post pandemic. On the other hand, inflation continued its uptrend in US and Europe. CPI rose further to 9.1% from 8.6% in US while rose to 8.6% from 8.1% in Europe. The Federal Reserve raised interest rate by 75bps amid this rising inflation. However, the dovish statement followed by Fed officials sent signals that policy tightening might be peaking in US. This triggered a strong rebound of risk asset in July. ECB also started the first hike in more than a decade, raised interest rate by 50bps, though signaled a preference for a meeting-by-meeting approach on the path ahead. Dollar slightly gained given rising recession risk in Europe.
For the outlook of August, market will remain volatile given the uncertainties in inflation and economic growth. China economy may still benefit from accommodative monetary policy and supportive policies on infrastructure and property industry. US economy may continue to slow down but in a milder than expected pace. Europe will suffer more than other major economies given it’s highly dependent on energy import and tightening policies.