US equities led a global equity rally in major developed markets in July as momentum factors enjoyed their day in the sun (Chart 1). However, the bulls will be tested again as the bears return from their holiday in the face of central bank rate hikes, rising recession risks, including a second consecutive quarter of negative US GDP. States and a two-year low in the JPMorgan Global Manufacturing PMI. ™, with business optimism falling to its lowest level since May 2020.
- United States: High-risk stocks returned to favor while ultra-short stocks suffered, as evidenced by underperformance in 60-month beta and supply-to-ask ratio, respectively
- Developed Europe: Deep Value signals including Book-to-Market and TTM Free Cash Flow-to-Enterprise Value posted negative spreads in July
- Developed Pacific: The performance of high momentum stocks surged last month in markets outside of Japan, leading to a rise in sector-adjusted 12-month relative price strength performance
- Emerging Markets: A rebound in investor momentum favored equities with attractive Rational Decay Alpha scores
Table 1
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
