Multi Asset Update – June
The ongoing rebound in investor sentiment helped many major stock markets deliver positive returns during June. The Brent Crude oil price rallied above $80 per barrel following US airstrikes on Iran’s nuclear facilities, before retreating below $70 per barrel after the announcement of a ceasefire. A combination of renewed investor confidence and strong earnings from US companies helped boost the shares of the US technology giants. After the initial shock caused by US President Donald Trump’s trade tariff announcements earlier this year, markets now appear largely to have put this behind them. Economic data remains mixed. On one hand, ‘hard’ data such as figures for wage growth and unemployment claims continue to surprise positively. However, forward-looking ‘soft’ indicators - such as surveys of sentiment and business expectations - remain more cautious. Until more clarity emerges, the central bankers of the US Federal Reserve (the Fed) appear content to wait and watch. Threats of further geopolitical escalation, tariff shocks, inflation uncertainty and pressure on the Fed mean that we currently see more attractive opportunities in bonds and alternatives investments, such as infrastructure and gold. In our view, equity valuations, particularly in the US, remain stretched and we believe a period of consolidation is likely after the recent strong run.
UK
Overall, the FTSE 100 had a flat month, only rising by 0.05%. However, during the course of the month it did register a new all-time high. This was mainly driven by tensions in the Middle East surrounding the exchange of missile strikes between Israel and Iran and the subsequent US bombing of Iranian nuclear facilities. This caused the FTSE 100 oil giants (Shell and BP) to rise. However, as investor concerns eased and oil prices fell, these companies gave back most of their gains, causing the index to fall back. On a more positive note, consumer confidence picked up as households have become more upbeat about the UK’s general economic situation.
Europe
The European economy showed signs of slow but steady growth. Inflation continued to ease, with confidence among consumers and businesses improving slightly. The European Central Bank (ECB) cut interest rates for the eighth time, as anticipated. It was interesting that the ECB’s president, Christine Lagarde, indicated she believes the bank is now in a ‘good position’ at the current level, perhaps indicating a pause in rate cuts from here. The ECB also downgraded economic growth forecasts in the near term due to the escalation of trade tensions since March
US
In the US, economic data was mildly positive, with jobs growth slightly better than expected. Annual inflation ticked up slightly to 2.4%, but was below expectations, which suggests that tariffs have not yet had a major impact. However, retail sales fell sharply as consumers reined in spending ahead of anticipated price increases. The Fed kept interest rates unchanged for the fourth meeting in a row, with slower growth and higher inflation potentially on the horizon.
Japan
Japanese shares remained volatile in June amid persistent tariff tensions, stalled US trade negotiations and heightened geopolitical uncertainty in the Middle East. Despite these headwinds, the TOPIX index, which is comprised of the country’s largest companies by stock market value, eked out a gain of 0.2% for the month. The Bank of Japan (BoJ) held its policy rate steady at 0.5%, citing ongoing growth concerns and external risks. The BoJ is continuing to slow the rate at which it buys Japanese government bonds, as it seeks to reduce the amount of money in circulation to ease inflation. However, the bank has signalled that from April 2026, it will reduce the speed at which it cuts back bond purchases, in a move designed to avoid further market disruption following May’s spike in yields*.
Asia and Emerging Markets
Asian and emerging market shares delivered robust gains in June, driven by a combination of favourable economic indicators and positive investor sentiment. Hong Kong’s Hang Seng Index was buoyed by investor optimism over China’s economic prospects and significant ‘A to H’ listings - where companies listed in mainland China seek a secondary listing in Hong Kong. Fast fashion giant Shein is also seeking a listing in Hong Kong, after abandoning plans for an Initial Public Offering (stock market flotation) in London. India’s BSE Sensex index also rallied strongly, with larger companies playing a significant role. A weakening US dollar further enhanced returns. Despite continuing global uncertainty, a combination of government policy support, favourable valuations and easing trade tensions contributed to the positive performance across these markets.
Bonds
In June, bond markets were a sea of competing, conflicting and, at times, confounding narratives. Trade tensions are easing, yet tariffs remain. Stock markets have been recovering strongly, even as expectations for the next round of company earnings have stagnated. The expected inflationary impact of tariffs remains elusive, yet the consensus is it will come. Central bank commentaries swirl from hope to concern and then to patience. Economic data suggests a slowing of growth, but investors seem unconvinced one way or the other. Bond yields showed significant daily movements, as they were pushed and pulled by the back and forth of market commentary. Investors taking a positive view on the outlook for bonds had the upper hand over the month. US government bonds led the pack, as yields declined and prices rose (bond yields and prices move in opposite directions).