GoalsGetter Monthly Commentary July 2025

July was another strong month for global equities as the rally from the early April “Liberation Day” sell-off continued, even as some of the extended deadlines for tariff negotiations expired. US, UK and Japanese equity markets made new all-time record highs, despite considerable ongoing uncertainty around the future terms and conditions for global trade. The MSCI ACWI (NZD Hedged) was up 2.2% and is up over 14% on a rolling one year basis. The US dollar was stronger against most other currencies (including the NZ Dollar), meaning the MSCI ACWI Index (NZD unhedged) was up 4.2%% (+12.6% rolling 1-yr). Global bonds (hedged to NZD) fell slightly, whereas NZ Bonds posted a solid gain in July and are now up nearly 3% year-to-date.

As well as the announcement of multiple trade agreements, there was also the passage in the US of the One Big Beautiful Bill Act (OBBBA), which improved policy clarity and boosted risk sentiment.  Corporate earnings for the second quarter of 2025 proved resilient in the US and Europe. Overall, they were ahead of consensus estimates and comfortably above levels from one year ago. While the mega-cap “magnificent 7” companies were a key driver of this, most other sectors/industries also contributed to the broader based earnings growth. In terms of economic data, US jobs data for July was weaker than expected, and also came with downward revisions to prior months. With inflation remaining sticky, the US Federal Reserve continued to “wait-and-watch” and kept short-term rates unchanged.  Central banks for the most part maintained an easing bias, albeit at a slower pace. The European Central Bank (ECB) held rate steady in July, but are expected to cut again later in the year. In Australia the RBA surprised with a ‘hold’ decision when a 25pt cut was expected. There is now considerable divergence in monetary policy settings across countries/regions. The US and UK have paused with rates above 4%, well above the 2% setting for Europe where inflation has fallen back to acceptable levels and economic growth remains sub-par.