July 2016 Market Commentary | IFA Colchester

With the Brexit result generally deemed as unfavourable for business and financial markets in many regards, one might have presumed that July could have ended up as a loss-making month for investment portfolios. However, as the graphic below shows, almost all asset classes recorded notable gains on the month.

One might be tempted to put much of this down to the currency effect caused by a weakening Pound (foreign currencies and investments are worth more to the British investor when translated back into Sterling terms after a relative decline in the Pound), but this is not the explanation; the sharp downward adjustment to GBP took place in late June and the Pound was broadly flat over the month of July versus the Dollar, Euro and Yen.

So what could explain the positive performance of most financial assets? There are several possibilities. The first clue is in identifying that the top half of the leader board on the chart above consists exclusively of higher risk assets, mainly in markets and areas of the