The major equity indices have gained around 9%, the NASDAQ rather more, Shanghai being the only negative on our list of major markets. Though we did suggest that markets had moved too far at the time of our last comment, we are not claiming any credit for the ensuing rally...

Almost more marked has been the turn-around in bond markets (and a major contributor to the equity rally), U.S. ten-year Treasury yields reached 3.5% on 14 June, but have since fallen back to the current 2.8% level as the balance of concerns appeared to shift quickly to recession, and despite a further 75bp move up in the Fed Funds Rate. The UK Gilt market has mirrored the moves in America with ten-year yields falling back below 2% (having hit 2.65% in June), also despite the ‘historic’ 50bp move up in the Base Rate and accompanying, rather hysterical, dire warnings from Governor Bailey.

US employment data came in much stronger than expected last week, calling into doubt the economic slow-down narrative. US inflation figures are likely to set the tone for the next few weeks, they are forecast to ease back a shade from June’s 9.1%, that would help…

Most of the sectoral shifts were in contrast to the first half. The major oils slipped, Chevron, TotalEnergies and Exxon fell around 5% as the price of oil came back below $100 per barrel (let’s hope this can continue), Repsol was the notable casualty with a 17% drop. Mining stocks fell back again across the board tracking further weakness in base metals prices, Anglo American by 17%, BHP Group by 12% and a 30% slump for Newmont as their Q2 figures disappointed.

The reporting season came to a hectic close with a rush of reports into the end of July, attempting to beat the summer holiday lull. Generally, these exceeded expectations and, though we must expect to see some marking-back of earnings expectations soon, this has not hit yet. The big banks kicked-off the season as usual, JPMorgan weakened after dull figures and are unchanged over this period, while Morgan Stanley and Goldman Sachs cheered and have both gained around 15%. European bank stocks drifted with concerns over the European economy as it approaches a difficult winter.

Tech led the way with some notable post-results performance from Apple, up 21%, and Microsoft up 11%. The biggest positive surprise came from Amazon.Com which gained 27% over this period after posting excellent figures in stark contrast to their dull statement at the end of April, which had led to a steep sell-off. Netflix also managed a 25% rally after posting less dire figures but they remain 60% lower for the year.

The luxury goods companies led a rally in some of the consumer discretionary names after good figures from Louis Vuitton, which gained 24%, and Hermes up by around 40%. This carried over to a number of the staple goods companies, which saw good gains for Diageo, L’Oreal and Pernod Ricard in particular. Generally, it does appear that the market is returning to the quality growth stocks, not before time…

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.