Equity markets delivered a third month in a row of positive returns, amid greater clarity on trade tariffs for a 1 August deadline.

The US announced tariff deals with a number of major trading partners in advance of the deadline. Additionally, the House of Representatives approved President Trump’s flagship tax and spending bills.

Technology stocks continued their rebound from the falls suffered earlier in the year. Optimism over the potential of artificial intelligence (AI) powered related stocks higher. Several technology stocks also posted some well-received quarterly earnings during July. Meanwhile, there was an agreement by the US that semiconductor companies could resume shipments of some key advanced processors to the Chinese market.

Elsewhere, some more defensive sectors – including healthcare and Consumer Staples – underperformed during July.

Around the rest of the world Eurozone stocks also advanced amid relief on tariffs and positive corporate earnings updates. Japan was up on the back of a better than feared election outcome, and reaching a favourable trade deal with the US (benefitting exporters and global cyclicals). Emerging markets outperformed developed markets, thanks to strong performance from the heavyweights Taiwan, China and Korea.

Within global bonds, the market focused on trade negotiations and on renewed fiscal discipline concerns. This caused global government bond yields to rise (negative for fixed interest returns). Corporate bonds performed better, amid an improvement in economic sentiment.

The US has set a 15% tariff on New Zealand goods exports, which came into force 1 August (previously 10%). This equates to an extra $500m in tariffs each year that US importers will have to pay to purchase NZ goods exports. This could be a risk for beef, dairy and wine. Dairy is dependent on a good result from US-China trade negotiations. On the positive, the NZ property sector rebounded back in July, after a tough last 1-2 years.

This impacted on the New Zealand stock market, which while it was up 1.8%, it was below most other global stock markets. The Reserve Bank of New Zealand (RBNZ) kept the OCR at 3.25%, with a 0.25% reduction in August still expected.

All the models were positive for a third month in a row, on the back of strong global equity and domestic equity returns, and also due to positive returns from fixed interest. The three month returns now range from 3% up to 10%, with the models with more growth assets (e.g. 98/2, 80/20) higher than the conservative portfolios.