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LCP Investment Summary ____ July 2020
Posted on 5 August, 2020 by Administrator
Global equity markets fell 0.3% (in € terms) in July. The Euro rose nearly 5% against the U.S. dollar over the month, reducing the strong return of U.S. equities for euro investors.
It was a mixed month for investors, reacting positively at times to potential progress on a COVID vaccine, the eventual announcement of the EU’s €750bn stimulus package and positive Q2 earnings reports from many of the large IT companies. The rising number of new COVID cases over the month in many countries (particularly in the U.S.) hit market sentiment, with some governments either delaying the easing of restrictions or re-imposing some restrictions (but in a more targeted way).
Recordbreaking negative Q2 economic data for both Germany and the U.S. was released late in the month, and while this was expected investors were concerned that the pace of a global recovery could potentially slow if infection rates continue to rise.
Longer-dated Eurozone bond prices rose 1.8% over the month, with the yield on the AAA Eurozone 15+ Year Index falling to -0.21% by month-end.
The Euro Broad Sovereign 10+ Year Index rose by 2.3% with its yield falling to 0.49%. Longer-dated AAA yields initially rose in early July but then fell for the rest of the month as COVID cases began to rise again, potentially slowing the possible recovery in the region. Investors also looked for ‘safe haven’ assets with equity markets again volatile late in the month.
Sample DC Schemes
All three of our sample DC Strategies rose as most asset classes were up for the month.