In aggregate, international markets seemed to quiet in July – The MSCI All Country World Index (ACWI) ex USA* was down 0.26%, as investors waited to see how high and on what countries and goods the US would impose tariffs. Year-to-date the index is still up 18.01%.
The MSCI Developed Market Europe Index was down 1.77% with seven of its top ten stocks in negative territory for the month. The worst of those, Novo Nordisk, was down over 30% due to concerns over its loss of GLP-1 market share. The Europe Emerging Market (EM) index; however, was up 3.1% – led by Greece, Hungary and Poland. Year-to-date the MSCI All Country Europe index was up 21.84%.
In aggregate, the MSCI EM Index was up 2.02%. The Latin American index was down 4.42% with Brazil and Chile giving back some of the great performance previous to July. EM Asia was up 2.55%. China, its largest component, was up 4.84%; but India, where tariffs are pending due to the country’s stance on Palestine was down 5%. A specialized index that includes Jordan, Egypt and Morocco was up 7.4%. Year-to-date MSCI’s EM Index was up 17.9%.
Elsewhere there were few dramatic market movements in July. Hong Kong, inextricably linked to China, was up 4.8%, Japan was down 1.4% and New Zealand was up 1.35%.
Entering August, the outlook for tariff negotiations evolves with the White House threatening Switzerland with a 39% rate and Taiwan with 20%. Levies on some Canadian goods are going up to 35% and other countries are facing tariffs between 10-15%.
Tariffs can hurt both the countries taxed and taxing by increasing inflation, disrupting trade-flows and creating economic uncertainty. Your Bastion Fiduciary Portfolio Managers will be watching closely the macroeconomic impacts of these tariffs but also will be digging deeply on each individual company to find the expected winners and losers as this drama unfolds.
*All Indices are Standard unless indicate otherwise, Year-to-date – refers to the end of July
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