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July 2021

The delta variant and inflation have dominated the news throughout 2021, and July has been no different. As some countries remove their covid restrictions other nations, particularly across Asia, are seeing rising cases and fresh lockdown measures. Inflation has continued to be high across developed countries and central banks have provided more suggestions as to when stimulus may be tapered. China has also been in the headlines; tensions with Taiwan, the perceived slowdown of growth in the economy and the government’s crackdown of Chinese companies have all contributed to increased market volatility throughout the month.

Of the major equity markets, only Europe and the US posted modest gains, with the UK remaining flat for the period. Japan, Asia, and China all saw significant pull back in the month, as did the yields on UK, US, and German bonds. The gold price increased 2.9%, and wider commodities indices also posted gains.

Market Round Up

Performance of major equity marketsJuly 2021Year to date
UK (FTSE 100) 0.1%11.0%
US (S&P 500)1.7%16.0%
Europe (MSCI Europe Ex UK)1.8%18.2%
Asia (MSCI Asia Pac Ex Japan)-5.9%1.2%
Japan (Nikkei 225)-4.8%-7.3%
China (SSE Composite)-5.9%-2.6%

Source: Morningstar Direct


In the UK, the last phase of lockdown easing went ahead on 19th July, despite the increasing number of covid cases and “pings” from the NHS Covid-19 app. There was a record number of notifications sent via the app, almost 700,000 in the week ending 21 July, advising people to self-isolate. There is concern that the number of people self-isolating is causing issues for businesses trying to fully reopen now restrictions have been lifted. The requirement to self-isolate for fully vaccinated people is set to be removed in August, as well as the requirement to quarantine for some visitors arriving into the UK.

The UK economy continued to grow with GDP increasing 0.8% in May, though this was lower than the expected 1.5%. It is expected that the economy will continue to grow over the coming months as it is still around 3% lower than the pre-pandemic peak. The CPI rose by 2.5% in the 12 months to June 2021, and it is predicted it could reach 3.5% or 4% by the end of the year, however it is believed that it will be temporary whilst the economy recovers. High inflation has seen the 10-year gilt yields drop further throughout July. The mixed news has meant the FTSE 100 continues to move sideways, gaining just 0.1% for the month.


President Biden became involved in the inflation discussion, saying that he believed inflation was temporary. The latest CPI figures show an increase of 0.9% in June 2021, which was the largest 1-month change since June 2008. Whilst the Federal Reserve have not provided any timelines for scaling back asset purchases, they are looking to agree a plan in case they have to move sooner than expected. US treasury yields on both 10- and 30-year bonds continued to fall throughout the month, the 10-year yield coming close to 1.2%. There was also weak demand for the monthly 30-year bond auction.

The delta variant continues to spread across the US, and President Biden has encouraged people to get vaccinated whilst condemning the misinformation circulating surrounding the vaccines. Despite this, the S&P 500 and Nasdaq continued to push to new record highs in July, fuelled by continued optimism of the economic recovery.


Coronavirus cases rose across Europe as restrictions were eased, however optimism remains for the post-pandemic recovery.

The European Central Bank (ECB) updated its inflation target to 2%, as well as guidance which would allow them to hold interest rates lower for longer and extend bond purchases if required. Members of the Governing Council have started to talk about how they meet their inflation goal post covid-crisis and would like to keep some flexibility in its bond-buying programme. Christine Lagarde said that the ECB will not tighten its policy too early.

Rest of the World

China-Taiwan tensions have increased recently, with both the US and Japan suggesting they would step in to defend Taiwan if required. China’s crackdown of its technology and education sectors has hit markets hard, with the biggest two-day drop since 2008.

Oil hit a six-year high at the start of the month when talks broke down between OPEC and its allies regarding production. Talks continued throughout the month and finally a deal was agreed, which allows an additional 400,000 barrels a day to be produced. Oil pulled back from its high to end the month at just over $75 per barrel.
Across the world nations continue to be impacted by the delta variant. Indonesia, Australia, and Malaysia are just a handful of countries that are seeing rising cases and increasing their restrictions.


Central bank minutes and comments are starting to provide more information on how long their stimulus will last, however there are still no firm timeframes set out for changes. The economic data is important, but eyes are also focussed on the delta variant and how rising cases are impacting the recovery of economies. The mixed data across the globe could cause further volatility and sideways market movements over the months to come.

Performance of major equity markets over 1 year (01 August 2020 – 31 July 2021):

Performance of major equity markets over 1 year1st August 2020 to
31st July 2021
UK (FTSE 100) 23.3%
US (S&P 500)28.8%
Europe (MSCI Europe Ex UK)33.3%
Asia (MSCI Asia Pac Ex Japan)19.0%
Japan (Nikkei 225)16.1%
China (SSE Composite)4.7%

Source: Morningstar Direct

Risk Warnings
The following is a summary only of some key items in the Prospectus. Capital is at risk. Investors in Protected Cell Company (PCC) must have the financial expertise and willingness to accept the risks inherent in this investment. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds. The Master funds will be exposed to stock markets. Stock market prices can move irrationally and be affected unpredictably by diverse factors, including political and economic events. It should be appreciated that the value of Shares is not guaranteed and may go down as well as up and that investors may not receive, on redemption of their Shares, the amount that they originally invested. Investment in the Company should only be undertaken as part of a diversified investment portfolio. Investment in the Shares should be viewed as a medium to long term investment. Shares may not be redeemed otherwise than on any Dealing Day. There will not be any secondary market in the shares of the Company.

Regulatory Information
This material is for distribution to professional clients only and should not be distributed to or relied upon by any other persons. The Cells referred to are a cell of Marlborough International Fund PCC Limited (the ‘Company’), a protected cell company incorporated in Guernsey and authorised as a Class B Collective Investment Scheme under the terms of the Protection of Investors (Bailiwick of Guernsey) law, 1987, as amended. Investment may only be made on the basis of the current Prospectus, this can be found on the website Marlborough International Management Limited is incorporated in Guernsey. Registration No. 27895. Regulated by the Guernsey Financial Services Commission. It is not protected by any investor compensation scheme. Licensed under The Protection of Investors (Bailiwick of Guernsey) Law 1987. Guernsey Office: Town Mills South, La Rue du Pre, St Peter Port, Guernsey GY1 3HZ. Tel: +44(0)1204 589336.