Financial Advisor Insights

July 2023 Global Markets Update | Savvy

July 2023 Global Markets Update | Savvy
Nathan Wallace
August 3, 2023


  • US markets continued to climb, on the back of positive earnings data, and signals that the Fed may be close to a pause in rate hikes in light of strong economic data and easing inflation.
  • Oil prices continue to rise driven by supply constraints and stronger than expected demand.
  • Chinese markets rallied on hopes of economic stimulus to combat lackluster economic growth.

US Markets

US markets finished broadly higher in July, with the Russell 2000 notching a 6.12% gain, while the Nasdaq and S&P 500 gained 4.08% and 3.21% respectively. Like June, every sector posted positive performance in July, led by a resurgent Energy sector and the continued positive performance of the Communications Services sector, home to Google, Meta, Netflix and others.

Positive results in July brought all sectors, save for Utilities and Health Care, into the green for 2023. US market performance has continued to be driven by Consumer Discretionary, Technology, and Communications Services. 

This is a marked change from 2022 where the sectors leading markets forward lagged the broader market significantly, as seen below.

July’s sector performance saw Energy lead the way as US rig count continued to decline1 and Saudi Arabia and Russia further constrained their production2. These reductions and constraints have led to oil prices hitting three month highs, a tailwind for US Energy companies. The other sector leader for the month was Communications Services led by strong earnings results by Google and Meta.

Good news on the earnings front was another contributing factor to positive July market returns. As of July 28th, with just about 50% of the S&P 500 having reported earnings, 80% of reporting companies have had earnings come in above estimates, and 64% of companies have reported revenues above estimates3.

Factor returns have followed a return pattern similar to US Sector returns, where those sectors that lagged in 2022 have roared back in 2023. Year to date factor returns have been driven by the Growth, and Quality factors. 

These factor returns can largely be explained by the strength of the Technology and Communications Services sectors (which feature many firms tilted towards Growth and Quality).

Global Markets

Global returns were led by strong performance in Chinese markets. Despite poor economic growth4, Chinese markets rallied almost 10% on the hopes that these woes would lead the government to step in with stimulus5. Broader global markets saw gains as well, but to a lesser extent than Chinese markets.

This positive July performance brought Chinese markets into the green for the year, though they are still lagging other global markets significantly. As mentioned above, the turnaround in Technology and Communications Services has buoyed US market returns, and particularly the Nasdaq which is now up 37% for the year. 

Fixed Income Markets

The Federal Reserve raised rates by a quarter point in July, a move widely expected by market participants. Despite declining inflation the Fed signaled that they would keep a close watch on inflation and would be prepared to hike again until they see evidence that inflation is “durably down”6. As one would expect, long term bonds saw somewhat significant negative returns during the month, while shorter term and floating rate securities were largely flat.

Despite the hike in July, the Fed dot plot anticipates rate cuts to begin in 2024 and continue through 20257. While this is all subject to change, it does seem like we are seeing the end stages of the current rate increase cycle.

Global bond yields ticked somewhat higher as well, save for a large increase in Japanese bond yields driven by the BOJs decision to loosen the reins on the permitted range for rates8. The Japanese 10 year bond rate rose to a nine year high on this change. 


The information contained herein has been obtained from sources that are believed to be reliable. However,  Savvy does not independently verify the accuracy of this information and makes no representations as to its accuracy or completeness.

All indices are unmanaged. You cannot invest directly in an index. Past performance is no guarantee of future results.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.