July turned out to be a strong month for global equity markets. The US Federal Reserve continued to emphasise there was little risk of an imminent slowdown in its asset purchasing program, while the results of US and European earnings season were generally positive. Economic data in the US was also encouraging, with a range of manufacturing surveys beating expectations. The ISM manufacturing index was the standout, jumping nearly five points to 55.4 – a level not seen in over two years. Q2 GDP growth also exceeded economists’ expectations, running at an annualised rate of 1.7% in the June quarter. On the downside, despite the Case-Shiller home price index increasing sharply, housing starts and building permits unexpectedly fell, while non-farm payrolls came in lower than expected at 162,000. Despite this, the unemployment rate fell to a four year low of 7.4%.
