June Market Update: A month of goals and own goals

a blurred action shot of a man kicking a football at a goal, with the goalie moving to the right-hand side. In the middle is a burgundy logo labelled 'Market Update'. The logo consists of an upwards facing arrow.
For financial professionals only

Here's our latest market update. You can also download our summary for investors to share with your clients.

What's moving markets

While football fans across the country will be lamenting a lacklustre last-16 performance from the England team, some solace can be found in UK inflation finally hitting the 2% target. In keeping with Jude Bellingham’s 95th minute equaliser, it’s a great milestone, but it’s taken a lot longer than expected.

Headline inflation figures capture the headlines. But it’s not until you unpack the details that you can really pass judgement. Both wages and services (which make up a big chunk of the UK economy) are still rising much faster than the Bank of England would like, making the 2% figure more of a technical tick in the box than a big win. It’s not surprising any potential rate cut has been pushed to August or September at the earliest.

The UK heads to the polls on Thursday this week, following a month of manifesto comparisons and TV debates - and an oddly busy June for the gambling commission. Putting to one side the accuracy of polls, it looks like a done deal given the margin Labour currently have.

The French are getting in on the action too, with Macron surprising everyone with a snap election following disappointing results in the EU Parliament. In a fairly complex political system, a two round voting process is underway, with an outcome that may involve Macron ‘cohabiting’ his Presidency with a Prime Minister from a different party. Understandably, risk assets didn’t take kindly to this, with the Europe ex UK index June’s worst performer.

Elsewhere, we’ve had bouts of market volatility from election outcomes in Mexico and South Africa. Arguably however, the most impactful result for markets was Narendra Modi failing to win an outright majority in India. His Bharatiya Janata Party (BJP) fell short of the 272 seats needed, so had to rely on a coalition to get over the line. Modi may now need to compromise a little more on policy, broadening the economic agenda to more rural areas and addressing the current disparity across the country a little more directly.

The first US presidential debate happened earlier than it normally would in the run up to the November vote. If it was intended to be a test of Biden’s ability to run (theoretically leaving enough time to swap him for someone else). It feels like he failed. It was a stuttering, meandering performance but the decision to run sits with him and it doesn’t look like he’s got any plans to step aside.

US politics apart, it was business as usual for markets. Nvidia overtook Apple to become the world’s 2nd largest company, then for good measure took the top spot from Microsoft later in the month, too. A subsequent “correction” of around 13% made its top ranking short lived, but at this point it appears more of a blip than a serious challenge to the AI momentum currently powering the US market upwards.

Looking past the world’s largest stock market, good returns from Gilts offset losses from UK stocks, supporting the benefits of multi asset investing and diversification. Asia and Emerging Markets also produced strong returns, keeping the momentum they’ve had going all year.

FTSE Actuaries UK Conventional Gilts All Stocks1.25-0.89-2.494.76-22.58
ICE BofA Global Corporate0.730.240.385.65-8.19
ICE BofA Global High Yield0.901.423.4010.930.88
FTSE All Share-1.153.737.4312.9823.90
FTSE USA4.313.9415.6024.7940.18
FTSE World Europe ex UK-1.640.267.1213.4322.03
FTSE Japan-0.29-4.666.2412.9115.44
FTSE Asia Pacific ex Japan4.245.999.0514.15-2.14
FTSE Emerging3.785.659.1614.11-1.87

Source: FE Analytics, GBP total return (%) to last month end

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity.

Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.