Global stocks deliver their strongest monthly gains in July for almost 2 years

Global stocks had their best month in July for almost two years, partially recovering from a woeful first half of 2022.

The market responded positively to company earnings reports and forward-looking guidance, much of which were better-than-feared.

In many instances, the effects of earnings misses were blunted by resilient demand, despite a slowing economic environment.

Although the US Federal Reserve hiked rates by 75bps, it also acknowledged the slowdown in economic growth and suggested it may cool the pace of further rate increases.

Coupled with strong tech earnings, this news sent shares of beaten-down growth stocks soaring.

Commodity prices, in general, fell amid the rise in recessionary fears.

The one notable exception was natural gas, whose price rose nearly 50% this month as power plants struggled to meet the cooling demands of their customers in the face of global heat waves.

Information Technology was the best-performing sector, and the US was the best performing region—both benefitting from the market’s renewed appreciation for expensive stocks of fast-growing businesses and the potential slowdown in the pace of Federal Reserve rate increases.

Conversely, Communication Services, Health Care, and Materials were the worst-performing sectors.

Emerging Markets was the worst-performing region, dragged down by Chinese stocks.

The Chinese real estate market rapidly deteriorated in July as declining home sales led to stalled projects, property developer defaults, and frustrated homeowners threatening to stop paying on their mortgages on unfinished homes.

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Pengana Capital Group