It is too early to call the pricking of the artificial intelligence (AI) bubble. In July in the US, however, there was an apparent rotation out of the Magnificent Seven. Nvidia (US:NVDA), Alphabet (US:GOOG), Microsoft (US:MSFT), Meta (US:META) and Amazon (US:AMZN) all fell between 3 and 6 per cent over the month. Small- and mid-cap companies rallied. The Nasdaq composite was down 0.8 per cent despite rising 2.6 per cent on the last day of the month. In contrast, the Russell 2000 went up 10.4 per cent in July. The S&P 500 gained 1.1 per cent, up 15.8 per cent this year.
In the UK, Labour gained a vast majority and professionally set about work. It will be interesting to see how long its honeymoon period lasts, but markets seem happy with its focus on growth and financial security. UK equities had a good month, with the FTSE All-share up by 3.8 per cent. Confidence in an improving economy led to mid- and small-caps doing better. The FTSE 250 (TR) was up 6.7 per cent. FTSE Small Cap (ex-Investment Companies) was up 5.2 per cent. Both indices are less than 10 per cent off their all-time highs of August 2021.
Elsewhere, the Italian MIB was up 1.6 per cent, the Dax 1.5 per cent, the CAC 0.8 per cent and the Tokyo Stock Price Index down 0.5 per cent. At 18.1 per cent year-to-date, it is still the best-performing primary equity market this year. Disappointing Chinese growth weighed on commodity prices: aluminium was down 10 per cent; zinc 9.3 per cent; copper 4.9 per cent; nickel 3.9 per cent; and platinum 2.8 per cent. Gold was up 2.5 per cent to $2,390 (£1,873), and Bitcoin was up 7.1 per cent to $64,620. Sterling responded well to the new government gaining against the US dollar (1.25 on 31 July) and the Euro (1.188).