Fund commentary
June was a month of varying market performance. The initial US-Iran peace deal raised hopes of reopening the Strait of Hormuz. But, following the rally in April and consolidation in May, the post peace moves were really an unwinding of the geopolitical trades. Oil prices fell hard boosting investor sentiment, although inflation and central bank messaging tempered optimism. In the UK, following months of pressure, Keir Starmer announced that he would step down as Prime Minister.
Fixed income markets had a more constructive month as government bond yields eased slightly as middle east tensions eased and corporate credit continued to do well. There is still volatility around inflation, central bank messaging and other data releases. Strong cash flow generation and manageable debt levels helped investment grade spreads tighten slightly. Higher yield bonds also had positive returns, but investors are becoming more selective.
US equities fell as concerns over rising inflation and possible rate rises. The Federal Reserve left interest rates on hold and actually hopes that inflation is under control and monetary policy might ease later in the year. Technology and AI-related businesses led the way, supported by financials although investors are becoming more selective. Elon Musk became the world’s first trillionaire (in US dollars) following the much-hyped IPO of SpaceX.
The Bank of England voted to keep interest rates on hold, but the dissenters voted to raise rates. Markets are hoping for policy easing later in the year, but this was tempered by uncertainty over the future direction of government policy as Sir Keir Starmer resigned on the 22nd. This triggered a leadership contest where there seems likely to be only one candidate following Andy Burnham’s return to parliament after his by-election win on the 18th. The European Central Bank raised rates in June, responding to inflation and the energy shock, signalling that pressure on inflation is likely to remain higher for longer than previously hoped. In contrast, equity markets rose on the ceasefire news and fall in oil prices.
Asian equities fell over the month as oil, growth and geopolitical tensions hurt sentiment. Korea and Taiwan, though, continued to benefit from exceptionally strong semiconductor demand. Japanese equities were broadly positive, supported by the Bank of Japan’s cautious approach.
Expectations on future US interest rate cuts led to the US dollar weakening slightly. The unwinding of the war trades saw oil prices fall 20% to $70 and gold fell a further 11% as its safe haven status was not needed. Industrial metals rose on the back of technology and infrastructure investment demand.
The world cup, co-hosted by Canada, Mexico and the US, began to much fanfare and some controversy. The early stages supported a flow of news for countries beginning with C. Curacao, the smallest nation to ever qualify, scored their first goal as did (D.R.) Congo. Fellow debutants Cape Verde then became the smallest nation to qualify for the knockout rounds and Canada, who followed up winning their first ever world cup match with qualification to the last 16 for the first time. Despite many matches being hosted in New York / New Jersey, basketball dominated the month there as the New York Knicks won their first NBA championship for 53 years.
All performance figures are in GBP unless otherwise stated.
All performance figures are in GBP unless otherwise stated.
Monthly data as at: 30/06/2026. All information also available to download here
