The S&P/ASX 200 Accumulation Index rose 1.4% during the month. The Australian equities market underperformed global equity markets in July led by a fall in resources. Developed markets outperformed emerging markets for the fourth consecutive month.
The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 0.16% over the month. The yield curve flattened as the spread between long-term and short-term bond yields narrowed. 3-year government bond yields ended the month up 3 basis points (bps) while 10-year government bond yields also rose, up 2 bps to 2.65%.
Global equity markets rallied throughout 2017 without any major setbacks. With volatility at extreme lows, it could be said that 2017 was an unusually fortunate year for market participants in terms of risk and reward.
Financial markets continue to come to terms with a more protectionist and less globalised world. The surprise perhaps is not that tariffs have finally been imposed by the US on its trading partners, but that it took so long for a key campaign promise to become reality in spite of Republican control of the House, the Senate and the White House since November 2016.
In the past few years, Turkey has faced some of the most monumental challenges in its recent history.
In March 2018, Bloomberg announced a conditional decision to include Chinese bonds in its flagship bond index: Bloomberg Barclays Global Aggregate, starting from April 2019.
The MSCI AC Asia ex Japan (AxJ) Index fell by 4.8% in USD terms amid persistent concerns about trade tensions between China and the US.
In June, the US Treasury (UST) curve flattened. The US Federal Reserve (Fed)'s 25 basis points (bps) rate hike was accompanied by a more hawkish tone, supporting higher short-term rates.
It may seem an optimistic view, but conditions seem to be shaping up for some major trade compromises relatively soon.
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com
Global growth is becoming increasingly less synchronized, with the Eurozone, Japan and UK showing an ongoing moderation in growth, whilst the US remains robust.