MARKETS IN A NUTSHELL — FOR JULY 2026

July brought an uneasy sense of déjà vu to markets. The fragile ceasefire between America and Iran collapsed, missile exchanges resumed and the Strait of Hormuz was once again closed to traffic. Iran struck tankers in the Gulf, while its Houthi allies threatened Saudi oil shipments leaving the Red Sea. Brent crude rose by almost a quarter during the month, undoing much of June’s relief.

The danger this time around lies not only in the renewed fighting, but in the fact that the world has already spent part of its insurance. Strategic oil reserves have been drawn down, commercial inventories are lean and shipping routes remain under strain. The disruption has also spread beyond crude oil. Refined fuels, European gas prices and war-risk insurance have all become dearer.

It was an awkward development for central banks. American inflation was easing as petrol prices fell, encouraging hopes that the spring shock would soon wash out of the data. Yet this improvement depends on energy prices staying subdued. Fresh Trump administration tariffs have now added a separate source of inflationary pressure, while higher transport costs threaten to seep into services prices.

Growth, meanwhile, is losing momentum. The American economy expanded at a slower annualised rate in the second quarter, although consumers remained resilient. China grew by 4.3% — one of its weakest rates in decades outside the pandemic — as retail sales disappointed and fixed investment contracted. The world economy is not in recession, but the prospect of slower growth and stubborn inflation is becoming harder to dismiss.

Global central banks responded hesitantly. The US Federal Reserve and South African Reserve Bank both left interest rates unchanged. Neither decision was particularly soothing to the bond markets. While three Fed officials favoured an increase, new Chair Warsh seemed content to let rising bond yields do the tightening. Long-term US borrowing costs climbed to their highest level since 2007. Japanese yields also reached 30-year highs. Global government bonds fell in July, as did South African bonds.

Equity markets were more discriminating than disorderly — broad American and developed-market indices were little changed, while South African equities edged higher. But some of the year’s most crowded trades retraced sharply. SpaceX fell by a third to well below its listing price. Korean memory-chip giants SK Hynix and Samsung plunged despite exceptional profit growth, pulling the Korean KOSPI down by nearly a quarter. In contrast, Chinese equities gained meaningfully in July.

It was a good month for the better diversified Foord global funds, which all performed near the top of their respective peer-group sectors. The Foord SA multi-asset funds that invest into them also had excellent results. The Foord fixed income suite avoided the worst of the bond market selloff and excelled compared to peers. 

Looking ahead, the artificial intelligence investment thesis is becoming less forgiving. Investors are no longer asking only how fast demand might grow, but whether the huge sums being spent on chips, data centres and power can earn an adequate return. Revenues are rising, but so are capital expenditures, borrowings and competition. Cheaper and increasingly capable Chinese models make the question more pressing.

July’s lesson is not that technology’s promise has disappeared, nor that every geopolitical shock must end badly. Rather, we are reminded that markets become increasingly fragile when too much confidence rests on one outcome. Diversification always matters most when it appears least necessary.