The month of July saw a continuing positive momentum in the global equity market, building on the recovery seen in June. The MSCI All Country World Equity index rose by 1,3% (in USD), to close a fourth consecutive positive month, as the stabilization of macroeconomic tensions and the easing of geopolitical tensions boosted investor sentiment.. Continental European markets registered modest returns in local currency terms, but these were erased for American investors by the stronger US dollar. The British and the Chinese markets once again outperformed the American with the FTSE100 and the Hang Seng indexes rising by 4,2% and 2,9%, respectively (in own currencies). The success of the UK market, was largely influenced by the weakening Pound which boosted the earnings for the FTSE100 large multinationals, while the Chinese shares were buoyed by the Politburo voted for further economic stimulus especially to the suffering solar, EV batteries, and construction materials industries. However, South Korea and Taiwan were the main winners from the global tech rally, with semiconductor companies reporting record-breaking volumes of orders. In general, globally diversified portfolios have demonstrated resilience through this year’s uncertainty, as international stocks have led market returns year-to-date – however, U.S. equity had recently regained momentum, and U.S. stock indexes continued their ascend in July. The S&P500 added 2.17% and, lifted by trade optimism and solid corporate earnings, chalked up 10 record closing highs in the month. Information technology was the top-performing sector for a third month in a row; over that stretch, tech stocks have now gained nearly 28% on a cumulative basis. Driven also by AI optimism, Utilities were another notable gainer in July; while the Consumer staples and Healthcare sectors lagged last. Healthcare is the only sector that remains in negative territory for the year (in USD). July was not a good month for fixed income markets as expectations for increased fiscal loosening pervaded. The Bloomberg Global Aggregate Bond index lost 1.5% (in USD), as yields increased and FX moves contributed negatively – the US dollar strengthened by over 3.1% against the EUR for the month. Improved economic sentiment led corporate bonds to outperform, while government bond yields rose on trade negotiations uncertainty and renewed fiscal discipline worries (bond yields move inversely to bond prices). As expected, the US Federal Reserve (Fed) left interest rates unchanged, while simultaneously the European Central Bank (ECB) also kept interest rates unchanged in July – for the first time in a year (after nine consecutive quarter-of-a-percentage cuts) – with President Lagarde striking a surprisingly hawkish tone. In the US concerns over central bank independence resurfaced, after President Trump criticized the Fed’s decision and sounded to threaten the Fed’s Chair Powell’s position, but later the President downplayed the incident and refuted such speculations. His “One Big Beautiful Bill” was signed into law with the net impact from all the tax reductions, the increased spending on defence and border security, and all the cuts to social security, expected to be negative for the country’s fiscal deficit – weighing on the Treasuries market.
    US shares advanced further in July, hitting new all-time highs. Investors were encouraged by a very strong start to the earnings season and the emergence of some clarity on trade tariffs. The flagship S&P500 posted returns of 2,17% for the month but was notably outperformed by the technological Nasdaq100, which registered gains of 3,7%.  Large tech companies posted especially strong results boosted by the optimism over the growth potential of artificial intelligence (AI) and cloud computing. Volatility dipped as the VIX index, a measure of investors’ nervousness, fell below 15 for the first time in over two years. Based on the companies that have reported so far in this season, close to 78% of companies in the S&P500 have beaten consensus earnings and revenue growth expectations, which is better than the long-term average. The Magnificent Seven companies continued to report stronger earnings growth (17% vs. 4%) and revenue growth (14% vs. 7%) compared to the rest of the market. As Technology stocks led the pack higher, Utilities, and Industrials companies also posted large monthly returns, while on the other side, some defensive sectors, like Consumer staples and Healthcare, underperformed. Markets were further placated by the US announced tariff deals with a number of major trading partners in advance of the 1 August deadline. Data for June showed also that US annual inflation (as measured by the consumer price index, CPI) had climbed to 2.7%, up from 2.5% in May, as increased tariffs began to be reflected in prices. With inflation remaining so sticky, the Fed showed little inclination toward an immediate interest rate cut. The US economy grew at an annualised rate of 3% in Q2, according to data from the Bureau of Economic Analysis, rebounding from the -0.5% contraction in Q1. The Q1 figure had been affected by a sharp rise in imports amid worries over potential trade tariffs. Thus, citing debt and deficit concerns following the passage of the One Big Beautiful Bill Act, the lagging impact of tariffs, and the strong econo-mic growth figures, the Fed left interest rates unchanged (at 4.25-4.50%) at its July meeting. Unpleasantly, tensions rose between the White House and the Fed, with Donald Trump ade some unkind remarks calling for the Fed’s Chair removal. Meanwhile, the labor market in the U.S. showed a meaningful signal of slowdown: the nonfarm jobs report showed 73k jobs added, below expectations of 104k, and importantly, the prior two months of jobs added were revised sharply lower. The unemployment rate also ticked higher from 4.1% to 4.2%. With the rate-cut pressure intensifying, markets are currently widely expecting an interest rate cut at the Fed’s September meeting. Bond markets were also affected by all the dynamics. Political pressure on the Fed is rising as the Trump’s administration pushes for financing costs of the huge public debt to be lowered. Treasury yields moved higher in July (meaning, their prices fell), reflecting the improving economic growth outlook but also the growing uneasiness of markets with the fiscal situation. Corporate bond markets enjoyed a positive month, outperforming government bonds. Favorable outlook and robust company earnings in the US – which exceeded expectations – drove solid performance across sectors and ratings, both for investment grade and high-yield corporate bonds.
     The upward movement of the European equity markets continued through the month of July, driven by positive investor sentiment, resilient economic data, and easing political uncertainty. The major European index STOXX600 rose by a slight 0,88% (in EUR) amid optimism surrounding the potential avoidance of harsh tariffs and better than expected earning reports from some of the companies.  UK companies led the rally, as the important equity index FTSE100 rose by a whopping 4,24% (in GBP) and passed 9,000 points for the first time in its history. This attracted investors, as a diversifying option away from the relatively expensive and concentrated US market. Meanwhile, data from Eurostat revealed that the Eurozone economy grew by 0.1% in Q2 2025, a slowdown from 0.6% in Q1 but better than feared given trade uncertainty during the period. The German index DAX40 had a modest but solid return of 0,65% (in EUR), as it reached almost all-time highs of 24,500 points amidst concerns over economic stagnation. Its gains are attributed to the global revenue exposure of its companies, which protects them somewhat from the sluggish domestic economy at home. The Euro appreciated over 3% against the US dollar reflecting on the positive European outlook and investor sentiment. The European Union struck a deal with the US for tariffs of 15% imposed on EU goods being imported into the US. Equities rose on the news, as markets were relieved that a threat by President Trump to impose 30% tariffs, and an outright trade war, had been avoided. Some industries (including aircraft and aircraft parts) secured exemptions from the tariffs. Among the top performing sectors during the month was Financials, after several European banks delivered positive earnings releases. The main losers in Europe, similarly to the US, were the Healthcare stocks, as the sector hit a new three-month low amidst pressure on large-cap pharmaceutical companies like Sanofi. The Information technology sector was among the weakest sectors amid disappointing quarterly earnings updates and outlook statements from some large European software and semiconductor stocks. Other underperforming sectors included Real estate and Utilities, which are sensitive to interest rates. In July, Eurozone government bond yields drifted higher as growth sentiment was broadly positive, and investors showed preference for equity. The composite PMI index rose to 51.0 in July (+0.4), driven by both services and manufacturing, and surpassing expectations. Eurozone inflation was in line with expectations at 2% y/y in June. Nevertheless, the ECB was reluctant to lower policy rates further given uncertainty around the unstable global economic outlook, and kept the deposit rate unchanged (at 2%) at its July meeting, flagging the slowing down of inflation. This cautious but optimistic approach contributed to a rising investor sentiment and marked the month of July as a period of recovery and relative calm.
     In line with the upturn in global markets, July brought a moderate but stable growth for investors on the Bulgarian stock market. The flagship SOFIX index reported a positive growth of almost 1.5%; the broader BGBX40 index even more: 1.82%. Continuing its stellar performance after last month, again the most significant result among the domestic indices was achieved by the small-cap index, beamX, which grew by 6.82% after only one company in its composition declined for the month. Among the blue chips stocks, the biggest decline for the month was recorded by the organic health food company Smart Organics AD, which fell by 1.77%. The best performing stock for the month was the commercial bank Central Cooperative Bank AD, up almost 6.8%. The month of July brought notable progress for the Bulgarian Stock Exchange, as on July 29th  trading in the shares of Hydrogenera (Green Innovations) began, and on 30 July the initial public offering (IPO) of the specialized investment company "IPO Growth" – a company that is exclusively engaged in investments in small and medium-sized enterprises in Bulgaria, through participation in IPOs and provision of capital. The company successfully raised over BGN 11.5 million (EUR 5.9 million). Unusually for the summer months, traded volumes and the number of transactions on the BSE increased in July compared to June.     
Source: Bloomberg, BSE, macromicro.me