Global equities continued their march higher in June (MSCI World Index +2.1% MoM), pushing them to a 12% YTD gain. The influence of mega-cap tech stocks on global equity market returns remains significant, with the Magnificent 7 (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) contributing half of the MSCI World’s performance YTD and more than 90% of June’s return. Nvidia (+13% MoM/+150% YTD) has been the standout performer, even amongst the Magnificent 7, delivering a quarter of global equity market returns in June and YTD. Nvidia’s 13% return for June came despite a three-day drop of 16% in its share price during the month.
Amongst the non-mega cap tech portion of the market, Europe’s equity market performance was among the most disappointing, with French equities (-6.6% MoM) leading European declines. French President Emmanuel Macron rattled investors with the surprise announcement of snap elections after his political alliance suffered a heavy defeat in European elections to Marine Le Pen’s far-right National Rally party.
Emerging markets (EMs) also had a strong month (MSCI EM +4% MoM), with AI computing again having a significant impact via Taiwanese chipmaker TSMC (+18% MoM), which accounted for c. 40% of June’s EM Index performance. Indian stocks (+7% MoM) also contributed strongly to EM performance as Indian Prime Minister Narendra Modi won crucial backing from two coalition allies, allowing him to form a government and extend his decade in power.
US 10-year government bond yields inched lower in a volatile month, with stronger-than-anticipated US employment data initially causing a spike in yields, which reversed when US inflation data showed inflation slowing marginally faster than anticipated. The US Federal Reserve (Fed) left rates on hold at its June meeting (as expected), while across the Atlantic, the European Central Bank (ECB) cut rates for the first time in almost five years. The marginally lower rate environment provided a slight tailwind for bonds, which eked out a positive return for the month, though not enough to drag them into positive territory for the year (Bloomberg Global Bond Index -3.2% YTD). After a small pullback in May, the US dollar again demonstrated its resilience, ending June stronger against most major currencies.
The Brent crude oil price ended the month 6% higher (US$86.41/bbl) despite a 5% drop in early June after an OPEC+ announcement that supply cuts would be extended but eventually phased out.
