July saw many companies report earnings with aggregate average sales and earnings growth of 4.6% and 11.0%, respectively, for all companies reporting globally. This was broadly in line with sales expectations and 6.2% ahead of third-party analyst forecasts of earnings. The earnings increase and positive surprises were most prevalent in the technology sector; however, share prices in the sector generally declined in part due to question marks over future level of growth and the sustainability of profit margins. Overall, the Bloomberg World Index gained 1.6%, while the Ashburton Global Equity Income Portfolio gained 3.5%.

Diversified Energy announced the acquisition of complementary, high-quality assets with low decline rates at an attractive price, which will be support future production growth. Their share price rose 24.5%.

Roche shares gained 17.2% following results from a phase 1 trial of an oral GLP-1 treatment demonstrated both safety and efficacy. It will however still be sometime before this pipeline product completes a pivotal study and potentially challenges the current injectables made by Novo Nordisk and Eli Lilly. The great raft of GLP-1 “me-too” pipeline products from the pharmaceutical industry suggests competition in this space ultimately being fierce. Such is the interest by investors in this space that there was only a muted reaction to the relatively large number of late-stage products discontinuing clinical trials. Results from the company at month end were 10% ahead of estimates and management raised guidance.

BAT reported results which pointed to an acceleration in second half performance with the launch of new categories and first half US investments gaining traction. The company also reaffirmed full year guidance and mentioned strong growth in reduced risk products, with the total number of vapour consumers accelerating. Shares gained 14.9%.

Merck (-8.6%) reported better-than-expected results in the second quarter, however cut its earning guidance to reflect its Eyebiotech and Harpoon Therapeutics acquisitions.

Microsoft’s results were in line with expectations, however the company announced plans to invest more in capital equipment to support more Cloud and Artificial Intelligence (AI) growth. Theirshares declined 6.4%.

Recent weaker-than-expected employment numbers sparked fears of a US recession as the Sahm Recession Indicator was triggered. The indicator signals the start of a recession when the three-month moving average of the US unemployment rate is at least 0.5% higher than the 12-month low. Although this indicator has historically been reliable, we do not believe the US will go into recession as the rise in unemployment figures was partly due to an increased participation ratio as more people move from ‘not working and not looking’ to ‘actively looking’ and employment growth was also positive. US Policymakers held interest rates at current levels in August; however, Federal Reserve Chair Jerome Powell signalled that September rate cuts were on the table. We, therefore, believe the global outlook for growth is positive and continue to look for opportunities especially in the broader market where certain sectors have not participated in higher markets year to date.

Disclaimer:

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