The Month in a Minute
Global shares were broadly flat in July, as weaker AI and technology stocks offset gains elsewhere. China, the UK, and Europe all had a good month, as US markets finished slightly down. Elsewhere, rising oil prices saw energy companies perform well, with central banks keeping interest rates unchanged.
AI trade tested once again as diversification shows its worth
The biggest story in July was a slowdown in AI-driven market momentum, with chipmakers and technology stocks amongst the weakest performers.
However, this drop was largely limited to AI-related stocks, as other regions and sectors held up well, highlighting the benefits of a diversified portfolio.
China was one of the strongest-performing markets, as investors moved money out of popular AI stocks into more attractively valued areas. In contrast, markets dominated by chipmakers such as South Korea, and Taiwan fell.
The US finished the month only slightly lower overall, while the UK and Europe delivered solid gains.
Company earnings were also in focus during July. Investors watched to see whether companies' AI spend was starting to lead to stronger profits. While results from some of the largest US companies were mixed, some shares recovered later in the month as investors focused on their longer-term growth potential.
Outside of the technology sector, energy companies performed well, as oil prices rose following tensions involving Iran. Higher oil prices also raised concerns that inflation could remain elevated, supporting some financial stocks and helping the FTSE 100 reach record highs towards the end of the month.
Both the US Federal Reserve and the Bank of England left interest rates unchanged. While inflation has eased, policymakers want more evidence that it's under control before cutting rates. Many investors still expect rates to fall, but timing remains uncertain.
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