We entered the year optimistic, and with the knowledge of the last six months, we are pleased that most of our expectations worked out.
Global growth remains desynchronized, with the Eurozone, Japan and the UK showing an ongoing moderation in growth, whilst the US remains robust.
All major value equity indices show that the last five years, and in particular the last 12 months, have been a challenge for value as a style.
Nearly every expert seems to be pessimistic about any progress being made during the US-China talks this week, citing the “low level delegations” attending, but there are many signs from both sides of an incipient deal, not to mention the obvious economic and political incentives to achieve such.
The MSCI AC Asia ex Japan (AxJ) Index edged higher in July as losses in China and Korea were offset by gains in India, the Philippines, Thailand and Malaysia.
The Japanese equity market rose in July, with the TOPIX (w/dividends) climbing 1.30% on-month and the Nikkei 225 (w/dividends) rising 1.12%. Stocks started the month lower amid anxiety over intensifying trade tensions between the US and China.
Equity pessimism took a breather in July as investors shifted focus from trade wars to the start of this quarter’s highly anticipated earnings season. With 53% of the companies in the S&P 500 reporting, over 80% had positive earnings-per-share surprises and almost 80% reported a positive sales surprise.
The Fed, led by Chairman Powell, will very likely resist any effort by the White House to pressure it into halting rate hikes.
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com
In July, US Treasury (UST) yields rose. US-China trade tensions continued to persist. The risk of a trade war between the US and Europe tempered after the two countries announced they will cut trade barriers.
Recent moves by the Chinese government to further liberalize its fund management industry have generated a lot of interest with some observers projecting that China will overtake the UK to be the second-largest asset management market.