Market Update: Equity, Bonds and Property

Developed markets have underperformed emerging markets this year - with the exception of Russia which has been negatively affected by the sanctions

Threadneedle Investments 21 August, 2014 | 11:10AM
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Global geopolitical concerns weighed on sentiment in equity markets in July, reflecting the ongoing crises in Ukraine and Gaza. In addition, US Q2 GDP print was well ahead of expectations at 4% annualised, raising fears that the US Federal Reserve could be forced to raise US interest rates sooner than markets currently anticipate. Risk assets struggled as a result, with the MSCI World index producing a return of -1.6%.

In contrast, with the exception of Russia emerging market equities generally had a positive month, the MSCI Emerging Markets index gained 2%, as signs of economic growth stabilisation in China surfaced. While emerging market debt was resilient, Russian debt performed very poorly as EU ambassadors approved upgraded sanctions following the Malaysia Airlines tragedy in Ukraine.

On the other side of the world, 10-year US Treasury yields moved higher in July, ending the month at 2.56%, up from 2.53% in June. However, 10-year bund yields fell as some weaker-than-expected sentiment surveys and a below-consensus reading for the harmonised index of European consumer prices for July stoked deflation concerns.

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Threadneedle Investments  actively manages £84.0 billion of assets (at 31 March 2013), investing on behalf of individuals, pension funds and corporations.

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