Despite the continued impact of the Russian invasion of Ukraine, European growth stocks posted double-digit increases, according to statistics from global data company Investment Metrics.
The MSCI Europe index returned 4.87%, with growth-oriented sectors, such as information technology and consumer discretionary, performing particularly strongly. However, value-dominant sectors in Europe, such as energy, financials, and communications, were essentially flat over the month.
The firm's analysts noted: “Europe has been more negatively impacted by the energy crisis caused by Russia’s invasion of Ukraine and the subsequent embargo of Russian energy resources.
“Energy price increases this year have been a major contributor to eurozone inflation. The euro and US dollar also reached parity in July for the first time in 20 years.”
As the S&P 500 increased by 9.2%, growth stocks outperformed value stocks for the second consecutive month, resulting in a good performance.
The firm noted: “Despite the recent market rally, the risks of further market turmoil remain front and centre. “
Inflation expectations have grown due to persistent supply shocks, the crisis in Ukraine, and the prospect for greater geopolitical turmoil in Taiwan.
This, along with the tightening of monetary policy, has fuelled anxieties that are expected to exacerbate uncertainty and equities market volatility.
”Emerging Markets did not participate in the bounce back seen in developed markets, Investment Metrics noted, with the MSCI Emerging Markets down 0.69%.
“This was driven by weak results in China as its manufacturing sector contracted during the month,” it said. “US dollar strength remained a headwind.”
By fLEXI tEAM