Blog: Stocks rally as bears take a summer recess – IHS Markit

US stocks led a global equity rally in major developed markets
in July, as momentum factors enjoyed their day in the sun (Table
1). However, the bulls will be tested once again as the bears
return from leave in the face of central bank rate increases,
increased recession risks including a second consecutive quarter of
negative GDP in the US and a two-year low in the J.P.Morgan Global
Manufacturing PMI™, with business optimism dipping to its lowest
level since May 2020.

  • US: High risk shares returned to favor while highly shorted
    shares suffered, as demonstrated by underperformance of 60-Month
    Beta and Demand Supply 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: Performance of high momentum shares surged
    last month in markets outside Japan, resulting in a spike in
    Industry-adjusted 12-month Relative Price Strength performance
  • Emerging markets: A rebound in investors’ favor towards
    momentum benefitted stocks with attractive Rational Decay Alpha

Table 1

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IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

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.

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