July 2026 Monthly Market Summary
Global Market and Economic Summary
July was shaped by two major shocks that pulled markets in opposite directions. Renewed conflict between the United States and Iran, and the disruption to shipping through the Strait of Hormuz, pushed Brent crude back above $100 per barrel for the first time in over two months, with the oil price gaining +23.6% during the month. At the same time, investors became increasingly sceptical about the economics of artificial intelligence (AI), shifting their focus from how much companies were spending on AI infrastructure to the returns those investments would ultimately generate. The combination produced a deceptively calm headline result. The MSCI World Index gained just 0.5%, masking one of the widest dispersions in market performance seen all year.
Developed Markets (DM) outperformed Emerging Markets (EM) for a second consecutive month. The MSCI World Index posted lacklustre returns, while the MSCI Emerging Markets Index fell, weighed down primarily by weakness in Asia. Korea’s KOSPI – the index that has defined the 2026 AI trade – suffered a drastic unwind, and Japan’s Nikkei 225 followed it lower. Even after July’s reversal, EM equities remain well ahead of DM on a year-to-date (YTD) basis (+20.3% versus +10.5%), and the KOSPI is still up 59.4% for the year. The dispersion within EM was itself remarkable: China’s onshore Shanghai SE Composite (- 5.9%) fell back to flat for the year, while the offshore Hang Seng Index rallied +13.1%. Fixed income was the weakest-performing asset class, as central bank rhetoric failed to reassure markets. The US Federal Reserve (Fed), the Bank of England (BoE) and the European Central Bank (ECB) all left policy rates unchanged, all on split votes, while offering little guidance on the future policy path. Faced with renewed inflation risks following the oil price shock and no meaningful policy response, yields pushed higher, leading global bond prices lower over the month. On the other hand, emerging market debt (EMD) was broadly flat and proved relatively resilient.
The return of triple-digit oil prices is the most significant development for the global inflation outlook. Higher energy prices feed into headline inflation and, with a lag, into inflation expectations. Markets have responded by reinforcing the “higher-for-longer” interest rate narrative, with the focus shifting away from slowing growth and towards persistent inflation risks. The steepening of developed-market yield curves – with long-term yields rising while policy rates remain relatively unchanged, suggests investors are demanding greater compensation for inflation uncertainty, rather than pricing in stronger economic growth. As a result, central banks face an increasingly difficult balancing act between containing inflation and supporting growth.
South African Market Update
South African equities recovered some ground in July, with the FTSE/JSE All Share Index gaining +1.2% after June’s -3.7% decline. Despite the rebound, the index remains marginally negative year-to-date (- 1.8%). As has been the case throughout the year, the headline return masked a wide dispersion in sector and stock-level performance.
Higher oil and industrial commodity prices were key drivers of market performance. Local energy counter Sasol (+20.2%) was among the largest contributors to index returns, benefiting from the increase in oil prices. However, the broader Industrials sector (+0.3%) was the worst-performing local sector equity, as local retailers such as Woolworths (-6.7%), Foschini (-5.4%), Tiger Brands (-5.4%) and Pepkor (-3.7%) all fell over the month. Resources (+2.1%) reversed a four-month losing streak, although performance within the sector was uneven, with Valterra Platinum (+12.1%), Thungela (+10.0%), Glencore (+7.7%), Impala Platinum (+4.4%) and Sibanye-Stillwater (+3.0%) advanced on the back of firmer platinum and copper prices, while gold stocks such as AngloGold Ashanti (-5.7%) and Gold Fields (-2.4%) were among the laggards. Financials (+1.2%) also contributed positively, supported by gains across the banking sector, with Investec (+11.3%) being the standout performer.
South African bonds reversed June’s gains, with the All Bond Index down -1.4% as local yields moved higher alongside global bond markets. The yield curve bear steepened: the short end remained relatively anchored following the South African Reserve Bank’s (SARB) decision to hold rates steady, while the long end sold off in line with rising 30-year yields in the US, UK and Europe. Inflation-linked bonds comfortably outperformed nominals over the month. Cash, as measured by STeFI (+0.6%), quietly beat bonds for the month while SA Listed Property (+2.3%) was the best-performing local asset class, mainly driven by offshore-focused counters.