July brought broad-based gains across global equity markets, fuelled by easing inflation pressures and resilient corporate earnings. Positive tailwinds also came from the U.S. revising its trade tariffs downwards, particularly for Japan and the European Union, providing a significant boost to investor sentiment globally. Markets interpreted these developments as signs that global trade tensions may continue to de-escalate, supporting cross-border growth prospects. Having declined for most of 2025, the US Dollar has recovered some of those losses, boosting the value of US shares held by euro-denominated funds.
Global equities extended their year-to-date performance, with the MSCI World Index gaining 4.3% in euro terms.
A standout performer was the U.S. S&P 500 Index, which rose 5.20%, buoyed by better-than-expected earnings, particularly from major technology and AI-centric firms. The rally was not just driven by a handful of mega-cap stocks; the equal-weighted S&P 500 also posted strong gains, indicating improving breadth and broader investor confidence across sectors including industrials, financials, and consumer discretionary.
Eurozone equities ended the month marginally lower, following a strong first half of the year. Investor caution also increased slightly due to the euro’s strength, which impacts the competitiveness of export-sensitive stocks. dragged down by warnings from continental technology corporations about the negative impact of US trade policy on their 2026 growth targets. Food and drinks companies also struggled, blaming increasing challenges from weak demand from China.
UK equities delivered solid returns, with the FTSE 100 Index climbing 3.5%, helped by easing inflation data and expectations of interest rate cuts. The index’s composition, with significant exposure to energy, commodities, and healthcare, was a tailwind amid a backdrop of rising oil prices and stronger-than-expected sector earnings.
In Asia, equity markets were led by China, where stocks surged on the back of improving consumer confidence, early signs of economic stabilisation, and expectations of interest rate cuts. Policymakers announced a new infrastructure spending package targeting digital networks and green energy, further lifting sentiment. The rally in China helped lift the broader emerging markets, which returned 4.7% in euro terms, as commodity exporters and Southeast Asian manufacturing countries also performed well.
Japanese equities posted more modest gains in euro terms during the month, remaining near multi-decade highs. However, mid-month announcements indicating progress in U.S.-Japan trade discussions provided a temporary lift to sentiment. Investors were encouraged by strong corporate earnings momentum – especially in the auto, machinery, and financial sectors – combined with the Bank of falling interest rates.
Bond markets were mixed. A rally in early July, driven by disinflation data, reversed later in the month as global growth suggested interest cuts were less likely and governments fuelled spending by issuing more debt. Overall, global bond returns finished July flat to slightly negative in euro terms.
In the U.S., June inflation data showing further progress However, bonds struggled driven by expectations for continued tax cuts and widening government deficits.
In the eurozone, government bond yields also moved higher, and prices fell. Corporate purchasing data suggested expansion across both manufacturing and services. Inflation remained stable at 2.0% y/y, in line with the European Central Bank’s (ECB) target. The ECB opted to hold rates steady, citing caution amid global trade uncertainty.
Once again, corporate bonds outperformed government debt, with credit spreads narrowing slightly amid continued strong earnings, low default activity, and stable fundamentals. Investors continued to have appetite for quality bonds in investment-grade and high-yield markets.
Elsewhere, listed real assets – particularly infrastructure and property equities – rebounded after a mixed performance earlier this year. Demand for income-producing assets increased as lower interest rate expectations emerged and investor interest returned to real estate investment trusts (REITs), with the asset class delivering positive returns.
Gold prices remained broadly stable, consolidating gains from earlier in the year and continuing to attract demand as a hedge against geopolitical and fiscal uncertainty.
Looking forward, markets remain focused on corporate earnings, the ever-evolving trade conflicts and the resilience across major developed markets. With some uncertainty remaining, it is inevitable that we will see ongoing volatility in equities, as well as in currency and bond markets. Markets do seem to be looking beyond the immediate concerns. Across Fairstone, we adopt a long-term approach to investing, with less focus on short-term noise. We suggest that our client portfolios remain well-diversified across geographies and asset classes, to provide growth ahead of bank interest rates and inflation over the recommended time horizons.
At Fairstone, we specialise in providing tailored investment planning advice to help clients achieve their financial goals. Our experienced advisors offer personalised strategies designed to optimise growth, manage risks, and ensure diversification across a wide range of assets. By working with Fairstone, you can have confidence that your investment decisions are guided by expertise, adaptability, and a commitment to your long-term success.
Contact us today to schedule a no-obligation investment consultation and start planning for a secure financial future.
This publication was prepared by Imogen Hambly CFA, Portfolio Manager for Fairstone Private Wealth Ltd (United Kingdom).Fairstone Private Wealth Ltd. is authorised and regulated by the Financial Conduct Authority (FRN: 457558)
This publication is for general information purposes and is not an invitation to deal or address your specific requirements. The information is believed to be reliable but is not guaranteed. Any expressions of opinions are subject to change without notice. This publication is not to be reproduced in whole or in part without prior permission. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information of the various source material, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We cannot accept responsibility for any loss due to acts or omissions taken in respect of the information contained within the articles. Thresholds, percentage rates and tax may be amended due to future legislative changes.
Information as of the date of publication 08/08/2025
