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Markets mixed as investors remain cautious


Published August 2020

Equity markets across the globe showed mixed results in July. ANZ’s Chief Investment Office outlines the performance in key markets globally.

US equities outperformed other regions along with Emerging Markets — where Chinese equities recorded strong gains. European and Japanese equities fell as outbreaks of COVID-19 sparked further second-wave fears.

Overall, global shares returned 3.3% and 0.6% in hedged and unhedged terms respectively.

Here at home, the S&P/ASX 300 had a relatively muted performance, closing July 0.6% higher. The top sectors were Communications Services, Materials and Information Technology – all recorded gains of at least 5%, while the Energy sector had the biggest fall of 6.3%.

The Australian dollar continued to climb against the US dollar, finishing 3.5% higher at 0.71 US cents.

In commodity markets, gold rose 10.9% in July — the biggest monthly gain since 2012 —as investors continue to be concerned about the global economic recovery.

The European Union (EU) agreed to a EUR 750 billion recovery fund, which is positive on two fronts: promoting a stronger bond among EU countries and providing support to the EU economy.

Weak global GDP

Across the globe, July GDP releases remained miserly. Q2 US GDP fell by an annualised rate of 32.9% compared with the previous quarter — the largest decline in GDP since World War 2. In Europe, Q2 GDP declined by 12.1% relative to the previous quarter — representing the largest quarterly fall in Eurozone history.

In the meantime, COVID-19 cases continued to rise aggressively in July. The World Health Organisation (WHO) reported more than 17 million cases globally at month-end.

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