July was a month in which almost nothing happened at the index level and almost everything happened underneath it. The MSCI World Index rose 0.5% in US dollars. The S&P 500 fell 0.1%. Both numbers are so close to zero that they tell you nothing useful. Beneath them, semiconductors fell more than 13%, energy stocks rose 12%, oil crossed one hundred dollars a barrel, and the Nikkei lost 8%. Closer to home the FTSE/JSE All Share added 1.2% in rand, ending a two-month sell-off, while the Reserve Bank surprised almost everyone by leaving rates alone in the face of a two-year inflation high.
The AI trade finally met a hard question
For most of the past eighteen months, the market has been willing to pay almost any price for exposure to artificial intelligence infrastructure. In July it stopped being willing, at least briefly. The MSCI World Semiconductors Index fell 13.2% over the month. The Nasdaq-100 dropped 6.6% and entered correction territory before recovering some ground into month-end. The S&P 500’s information technology sector fell 8.0%.
The trigger was not bad news. It was good news that was not good enough. TSMC reported second-quarter revenue of about US$40 billion at a gross margin close to 68% on 16 July — a strong result by any ordinary standard. The following day Taiwan’s TAIEX suffered its largest-ever single-day points decline, falling 6.5%. When a company delivers excellent numbers and the stock falls anyway, the market is not repricing the company. It is repricing the expectations that had been built on top of it.
Good results that disappoint are more informative than bad results that surprise. They tell you what was already in the price.
The rotation out of that trade went somewhere. Value stocks rose 3.6% while growth fell 2.5%. Energy was the best-performing US sector at +12.0%, financials returned +6.2%, and healthcare and consumer staples finished modestly higher. Markets with little semiconductor exposure did well: the FTSE All-Share gained 3.7% in sterling and was among the strongest developed markets of the month. Japan split down the middle — the semiconductor-heavy Nikkei 225 fell 8.1% in yen while the broader TOPIX was flat at +0.2%. That eight-point gap inside a single market is the cleanest picture of what July actually was.
Oil did the damage, and bonds felt it first
The other story of July was energy. Renewed US-Iran hostilities disrupted traffic through the Strait of Hormuz, US strikes on Iran followed reported attacks on commercial vessels early in the month, and Brent crude touched an intraday high above $100 a barrel on 23 July. It settled the month at $90.12, up about 24%. The broader Bloomberg Commodity Index rose 7.5%.
Bond markets responded the way bond markets always respond to an oil shock: badly. The Bloomberg Global Aggregate Bond Index fell 0.5% in US dollars. The US ten-year Treasury yield rose about 30 basis points to around 4.75%, and the thirty-year reached 5.27%, its highest level since 2007. German and UK ten-year yields also rose. Credit spreads widened modestly, with US high yield out ten basis points to 285 and investment grade out three to 79.
Central banks all held, and all sounded uncomfortable doing it. The Federal Reserve kept its target range at 3.50% to 3.75% on 29 July, but on a 9-3 vote with three members dissenting in favour of a hike. The Bank of England held at 3.75% on a 6-3 vote, again with the dissents on the hawkish side. The European Central Bank held its deposit rate at 2.25% and the Bank of Japan held at 1.00%. Nobody is cutting. Several people at each table want to be tightening.
The Reserve Bank blinks, and then doesn’t
South Africa’s month turned on two dates two days apart. On 22 July, Stats SA reported that headline inflation had risen to 5.0% year on year in June, up from 4.5% in May and the highest reading since June 2024. Core inflation rose to 4.1%. The damage was almost entirely fuel: petrol and diesel prices were up 34.3% over twelve months, pushing transport inflation to 12.7%. Food and non-alcoholic beverage inflation, by contrast, was just 1.6%, which is remarkably benign and easy to miss underneath the headline.
On 23 July the Monetary Policy Committee held the repo rate at 7.00%, leaving prime at 10.50%. Most analysts had expected a hike. The vote was 4-2, with the two dissenters wanting 25 basis points more. Governor Kganyago framed the decision around the nature of the shock rather than its size: the Bank is setting policy to reach 3% inflation over time and judged that a supply-driven fuel spike does not warrant tightening provided expectations stay anchored. The SARB simultaneously lowered its 2026 inflation forecast to 4.0% and raised its 2026 growth forecast to 1.4%.
Markets disagreed, loudly. The rand slid past R16.80 to the dollar on the day, and local bond yields rose. Over the full month the rand ended around R16.55, roughly 1% weaker against the dollar, about 2% weaker against the euro and closer to 3% weaker against a strong pound. The All Bond Index returned −1.4% in rand as the ten-year government yield rose roughly 30 basis points to around 8.75%. SA cash returned about 0.6%, which quietly beat local bonds, global bonds and the S&P 500 for the month.
For your interest
1. The US put a new 12.5% tariff on South African exports
- Effective 24 July 2026, Washington applied a 12.5% tariff to South African goods under Section 301 of the Trade Act of 1974, following an investigation into the enforcement of forced-labour import prohibitions. Sixty trading partners were assessed and placed in one of two bands, 10% or 12.5%; South Africa landed in the upper one.
- A list of exemptions applies, reported to include platinum group metals, certain citrus and other agricultural goods, and the duty does not stack on goods already covered by the Section 232 steel and aluminium tariffs. Government has said it will publish forced-labour regulations while continuing to engage the US Trade Representative.
Sources: American Chamber of Commerce in South Africa and Engineering News, 24–27 July 2026.
2. Eskom passed 427 days without load shedding
- In its 17 July system update, Eskom confirmed 427 consecutive days without load shedding since 16 May 2025, with a financial year-to-date energy availability factor of 65.46%, up 6.52 percentage points on the prior year.
- Diesel spend for the year to date fell to R807 million, an 85% reduction on the R5.55 billion spent a year earlier. A sixth province was declared free of load reduction.
Source: Eskom media statement, 17 July 2026.
3. Filing season opened and SARS moved fast
- SARS ran auto-assessments from 1 to 12 July, assessing more than 1.9 million taxpayers and paying out roughly R8 billion in refunds within 72 hours of the window opening.
- General filing opened on 13 July and closes on 23 October 2026. Provisional taxpayers and trusts have until 22 January 2027. If you were auto-assessed, check it rather than assume it — investment income, rental income and offshore holdings are exactly what these assessments miss.
Source: SARS media releases, June and July 2026.
4. Manufacturing weakened, but not as badly as the headline suggests
- The Absa Manufacturing PMI fell to 46.8 in July from 47.3 in June, a second consecutive month below the neutral 50 mark.
- Underneath it, business activity rose for a second month to 48.8 and new sales orders recovered to 44.1 on stronger domestic demand. The purchasing price index fell, suggesting the oil shock is starting to ease at the factory gate. Expected business conditions dropped sharply to 49.3 from 56.6, so confidence is the problem more than current demand.
Source: Absa / BER Purchasing Managers’ Index, released 3 August 2026.
What we are watching
Three things matter over the next quarter. The first is whether the fuel shock feeds into anything other than fuel. Core inflation at 4.1% and food inflation at 1.6% suggest it has not yet. If core keeps drifting up, the Reserve Bank’s July patience will look like a mistake and September will be uncomfortable. The July CPI print is due on 19 August and the next MPC meeting is on 23 September.
The second is whether July’s rotation was a pause or a turn. One month of value beating growth after eighteen months the other way is not a trend. It is, however, a useful reminder that concentration risk is real and that a portfolio which has felt clever for two years was making a bet, whether or not it was framed as one.
The third is the tariff. A 12.5% duty on a meaningful share of exports is not fatal, but it lands on an economy the Reserve Bank expects to grow just 1.4% this year, with unemployment at 33.6%. The exemptions on platinum group metals and citrus matter enormously for exactly the sectors that could least afford the hit.
None of this changes how we build portfolios. It rarely does. A month like July — where the index went nowhere while everything inside it moved violently — is the strongest argument we know for owning things you did not choose because they were exciting.
Market overview
Global overview
Global equities were essentially flat in aggregate. The MSCI World Index returned 0.5% in US dollars and the MSCI All Country World Index 0.1%. The S&P 500 fell 0.1% while the Nasdaq-100 lost 6.6%. Europe edged higher, with the STOXX Europe 600 up 1.3% in euros and the EURO STOXX 50 up 0.6%. The UK was a standout at +3.7% for the FTSE All-Share in sterling. Japan diverged sharply, the Nikkei 225 falling 8.1% in yen against a flat TOPIX at +0.2%. Emerging markets fell 3.0% in US dollars despite MSCI China rising 9.0% and the Hang Seng 13.1%, with heavy losses in South Korea and Taiwan offsetting the Chinese rally.
Global bonds lost ground. The Bloomberg Global Aggregate Bond Index fell 0.5% in US dollars as yields rose across developed markets on the oil shock and reduced expectations of easing. Commodities were the standout asset class, with the Bloomberg Commodity Index up 7.5% and Brent crude up roughly 24% to settle near $90 a barrel. Gold rose about 1%. The US dollar weakened, with the Dollar Index ending the month at 99.80, and the yen strengthened roughly 2% against the dollar. Global listed property held up well, with broad global REIT indices up roughly 2% to 3% in US dollars.
Local overview
South African equities ended a two-month sell-off. The FTSE/JSE All Share Index returned 1.2% in rand, with the Top 40 up 1.4%, mid caps up 1.4% and small caps down 0.4%. Resources led at roughly 2.2%, helped by Sasol’s 20% gain on the oil price and strength in platinum miners, though gold miners fell about 3% despite a firmer gold price. Financials returned about 1.2% and industrials lagged at roughly 0.3%. Naspers and Prosus gained 6% and 8% respectively on the Chinese rally, while MTN fell close to 11% on its final trading day of the month on a Ghanaian legal claim, capping a poor month for the stock.
South African bonds fell. The All Bond Index returned −1.4% in rand as the ten-year yield rose roughly 30 basis points to around 8.75%, driven by the Reserve Bank’s surprise decision to hold. SA cash returned about 0.6%. SA listed property was the strongest local asset class, with published returns ranging from 1.4% to 2.3% depending on the index, The rand weakened by roughly 1% against the dollar to about R16.55, by about 2% against the euro and by closer to 3% against the pound.
Figures in this overview are drawn from public sources including J.P. Morgan Asset Management, Janus Henderson, STOXX, MSCI, S&P Dow Jones Indices, Anchor Capital, RisCura, Simeka, Statistics South Africa, the South African Reserve Bank, Eskom, SARS and the Absa/BER PMI. Past performance is not a guide to future returns. This is general market commentary and not advice; it does not take your personal circumstances into account.
