Monthly market summary – Review of July 2026

US equities were broadly flat in US dollar terms, equating to a 1.4% loss for sterling-based investors, as the market reassessed the outlook for some of the strongest-performing technology companies. While company earnings generally exceeded expectations, concerns about elevated valuations in AI-related stocks led to weakness in the technology sector. Energy companies benefited from higher oil prices, while financial firms were supported by resilient economic conditions and solid results. Overall, investors became more selective, focusing on companies with attractive valuations and dependable earnings prospects.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.

European equities were down 0.8% for sterling-based investors in July. Technology stocks struggled amid concerns about growing competition from Chinese firms and pressure on semiconductor-related businesses. However, energy companies benefited from rising oil prices, while several banks reported positive earnings, helping financial stocks perform well. Economic growth in the eurozone proved more resilient than expected, and inflation remained above the European Central Bank (ECB) target, increasing expectations that interest rates could remain higher for longer.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.  

The UK was the strongest performing developed market in July, up 3.9%. Its lower exposure to technology stocks and higher exposure to energy and financial companies worked in its favour as market leadership shifted away from AI-related businesses. Rising oil prices supported energy shares, while financials also delivered positive returns. The Bank of England (BoE) left interest rates unchanged, and investors took comfort from signs that inflation pressures were gradually easing, despite remaining above target.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.

Japanese equities experienced a volatile month. The broader market delivered moderate losses, but there was a significant difference between sectors. Technology and semiconductor companies came under pressure as investors questioned whether expectations for AI-related profits had become too optimistic. In contrast, financial companies benefited from higher interest rates, while value-oriented sectors such automotive stocks rebounded. The shift highlighted growing investor interest in more attractively valued areas of the market.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.

Emerging market equities were down 4.4% in July, largely due to weakness in technology-heavy markets such as South Korea and Taiwan. Concerns about AI spending, increased competition from China, and valuation pressures affected semiconductor companies and weighed on investor sentiment. China was one of the strongest-performing major emerging markets as investors rotated into banks and internet businesses. Elsewhere, firmer commodity prices supported several resource-focused markets, helping offset some of the broader weakness.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.

Bond markets faced a challenging backdrop as higher oil prices fuelled concerns that inflation could remain elevated. Rising inflation expectations pushed government bond yields higher, which resulted in weaker bond prices. Investors also questioned whether central banks were doing enough to control inflation, particularly in the US. Corporate bonds held up relatively well thanks to resilient economic growth and supportive earnings, although technology-related issuers faced greater pressure as enthusiasm around AI cooled.

The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.