Global equities wobbled into the halfway mark of 2026, falling for only the second time in fifteen months (MSCI World -0.7% MoM), though they remain up 10% YTD. June was marked by geopolitical volatility, which saw US forces launch missiles at various Iranian targets, breaching a ceasefire, just a week before signing an interim peace deal which cleared the way for the reopening of the Strait of Hormuz, the world’s most important oil chokepoint. The reopening of the Strait helped drive the oil price lower (-21% MoM), pushing Brent crude oil to US$73/bbl, down 40% since its late March peak, roughly in line with where it was trading before the start of the Iran war at the end of February.
Broadcom, a key supplier of chips and enterprise software for AI infrastructure, delivered a disappointing outlook early in June, reigniting investor concerns around returns on AI capex spending and stock valuations. The S&P 500 semiconductor sector (-15% MoM) was one of the biggest detractors from June’s equity market performance, though within that sector there was a clear bifurcation. Memory chip manufacturers like Micron (+19% MoM) outperformed the likes of Nvidia (-5% MoM) as AI spending starts to spread amongst a wider range of semiconductor companies. As the faster-growing parts of the market wobbled, the more defensive sectors outperformed, with US value stocks (+2.3% MoM) faring significantly better than their growth counterparts (-2.7% MoM) to leave the value stocks (+16% YTD) comfortably ahead of the growth stocks (+5% YTD) for 1H26.
Emerging market (EM) equities also struggled in June (MSCI EM -1.4% MoM), with the biggest drag coming from Chinese stocks (Hang Seng China Enterprises Index -10% MoM, -15% YTD). Disappointing macroeconomic data out of China served to worsen investor sentiment, with the country’s latest retail sales data showing a drop in retail spending (-0.6% YoY) for the first time since China’s post-COVID-19 reopening in 2022.
US President Donald Trump’s new central bank (Fed) chair, Kevin Warsh, oversaw his first Fed meeting in June, leaving rates unchanged (as expected). However, Warsh’s first press conference was more hawkish than anticipated, leaving investors weighing the possibility of a rate hike in 2026. The prospect of potentially tighter monetary policy from the Fed helped buoy the US dollar, which ended the month stronger against most major currencies (US Dollar Index +2.3% MoM).
