Global Market Insights: June 2024

World Market Summary

US equities, Asian equities (excluding China) and government bonds all delivered positive returns in the month whilst political concerns contributed to a fall in UK and continental European equities, with French shares being most impacted.
The European Central Bank (ECB) became the first western central bank to ease this cycle whilst both the Federal Reserve (Fed) and the Bank of England (BoE) held steady. We still expect both to cut interest rates by year-end, but acknowledge scepticism is building with regards to the US. This is despite the Fed’s favourite gauge of inflation, personal consumption expenditures (PCE) inflation already having dropped below 3% and retail sales, housing starts and manufacturing new orders all coming in below expectations.
Investors reacted badly to gains by far right parties in Europe because they fear fiscal largesse is more likely if they gain more power.
Technology continued to perform well whilst small-cap stocks struggled on a relative basis, especially in the US.
Oil staged a bit of a rally after falling nearly 10% into early June.
As to be expected in a more cautious environment, credit spreads widened as investors wanted extra compensation for taking extra risks above that of the highest rated sovereign bonds.
With economies (excluding the US) continuing to recover and with the US looking as if it will avoid a recession, we remain confident through year-end. However, currently the market is very narrow (not many companies outperforming) and retail participation is high. Therefore we will not be surprised if we get a chance to add to our favourite positions at more attractive prices sometime before the end of autumn.

Our in-depth views on:

Our weightings are based on sterling as a base currency.

United Kingdom

Despite the somewhat unexpected announcement of the General Election at the start of July, it has been more or less ‘business as usual’ for UK markets. The FTSE 100 was down marginally at 1.34% whilst UK small and mid-caps remain poised to benefit from a blend of pro-growth drivers over the coming months. The 10-year gilt and large-cap markets have had little fluctuation, whilst sterling, a common barometer of political sentiment, is close to the highest it has been in the period since Brexit. Labour are now estimated to have 40% of the vote according to polls, double that of the Conservative party. This has brought further predictability to the UK political landscape and goes some way in explaining the moderate market response in June.

Consumer confidence levels have continued to rise, hitting its highest level since 2021 whilst the Lloyds Bank Business Barometer was close to an eight-year high. As expected, the BoE chose to hold interest rates at 5.25% despite UK inflation returning to the 2% target. Consequently, it is increasingly likely that we will see an interest rate cut this summer. Services inflation remained sticky at 5.7%, likely due to the enduring effect of April’s 10% increase in the minimum wage. Nonetheless, the labour market and wage pressures continue to ease notably.

Regarding other important economic data, unemployment reached its highest level since the pandemic at 4.4% which should give the central banks encouragement on the aforementioned decision to cut interest rates and retail sales also remained strong. Quarter 1 (Q1) Gross Domestic Product (GDP) was revised slightly upwards to 0.7% and indicates that 0.7% for the full year is likely too conservative.

United States (US)

US equities led the way in developed markets this month after a better-than-expected inflation print and resulting fall in bond yields. The Nasdaq was once again the star of the show up 6.27% while the S&P 500 was up 3.59%. The Russell 2000 finished down in the month as US small-caps have continued to struggle this year. This index may be reflecting some of the underlying signs of weakness in the economy that have continued to emerge.

Delving further into these signs of weakness, economic surprises (the number of data points coming in better than anticipated by investors) have continued to fall and some of the key misses this month included durable goods orders, new home sales and retail sales among others.

On the political front, it was another month of headlines with President Biden performing extremely poorly in the first televised debate of this election campaign with most people now questioning his health and ability to take office. The betting odds on a Biden victory have been slashed and unless the Democrats get their act together, the possibility of a Trump 2.0 leadership becomes ever more likely.

According to Raymond James, the average stock in the S&P 500 was down 3% in Q2 2024 while the overall S&P 500 index was up 3.4%. This kind of narrowness ends one of two ways. Either the laggards catch up to the leaders or the leaders are due for a correction. We are about to enter the summer months where negative seasonality effects usually occur and based on the technical setup, we would not be surprised to see a summer pullback in the US market.


It was an eventful month in Europe with the big news being the shock decision of French leader, Emmanuel Macron, to call a snap election. This came on the back of his party suffering a big defeat in the EU elections to the far right party known as the National Rally (RN).

At the time of writing this and after the first round of voting, it appears that RN have continued their momentum and are ahead with around 34% of the votes with the Left party, New Popular Front (NFP) with around 28% and Macrons Party with around 21%. The outcome is still very uncertain with a number of scenarios still a possibility. We expect volatility in the coming weeks until the outcome of the second round of voting is revealed and thereafter.

This news has had a big impact on financial markets. In equity markets, the headline French index, the Dax, was down over 6% in the month. Meanwhile spreads of French vs German bonds moved materially wider. This was mainly due to concerns about fiscal spending, as French debt/GDP already stands at over 110% and is currently in breach of EU rules. 

Other European markets were not immune to this uncertainty and European markets finished down for the month.

From an economic perspective, European data was in aggregate slightly weaker than expected including manufacturing, industrial production and retail sales. However, following continued good news on the inflation front, the ECB did cut interest rates by 0.25%and we would expect further cuts this year which should support growth.

We are underweight in European holdings in our model portfolios, and despite the uncertainty in the short term, we are still positive on the region in the long-term. Cheap valuations combined with interest rate cuts, an industrial recovery, and accelerating earnings should drive share prices.

Asia and Emerging Markets

Indian equities led the way, recovering strongly from a sharp selloff in the immediate aftermath of the election which returned Modi with a reduced majority. Japanese shares also rose as economic numbers were generally stronger and inflation remained above the Bank of Japan’s 2% goal. This is considered a good thing in Japan, which has been in a long period of deflation. Chinese shares gave up some of their recent gains as the aggregate of economic numbers failed to inspire, with one positive set of results being met with a correspondingly disappointing number, for example, retail sales good, industrial production below expectations.

Both Korean and Taiwanese shares performed strongly, helped by the heavy technology weights in their indices.

According to Capital Economics, several Asian central banks are looking to cut interest rates in the fourth quarter, as long as this does not cause them to be too out of synch with the Fed. India, Korea and Indonesia are amongst those ready to cut so further impetus could be given to the region should these cuts occur.

Fixed Income

Government bond yields fell during June due to the ECB becoming the first major western central bank to cut interest rates, European election results causing a “flight to safety” and also as a result of the emergence of some incremental evidence of a deceleration in US economic growth. Both the Fed and BoE held interest rates at their respective meetings but markets still expect the latter to cut before the end of the summer. There is more debate as to whether the Fed will follow suit, but Fed Chairman Powell did intimate this was likely in his post meeting public statement. We remain convinced the Fed will also cut rates.

The calling of a snap election in France caused spreads over German bunds (bonds) to widen (i.e. the extra interest investors require for holding French bonds over German) as fears over fiscal largesse by both far left and far right political parties surfaced.

A smaller-than-expected rise in retail sales, a one-year low in ISM Manufacturing new orders, and wet weather contributing to the lowest level of Housing Starts since June 2020 provided evidence of a slowing US economy. It should be noted that the non-farm payrolls were significantly better than expected although the separate Job Openings and Labor Turnover Survey (JOLTS) job series fell to its lowest level since February 2021.

In the backdrop of a generally cautious environment, credit spreads on corporate debt increased over the period.


Commodity markets saw a decline in June after three months of gains, driven primarily by sharp losses in industrial metals, including energy transition metals like copper and nickel, reflecting subdued construction activities and reduced Green Party support in the EU. Gold remained stable, trading between $2,300 and $2,350 per ounce, supported by strong demand from central banks. The World Gold Council’s latest survey indicated a record number of central banks planning to increase gold reserves due to long-term value and geopolitical risk concerns. However, silver, which is more exposed to industrial sectors, declined by 8.33% due to fears of a global slowdown.

Oil prices rebounded sharply due to escalating tensions between Israel and Hezbollah, raising the risk of a broader Middle East conflict potentially involving Iran. Contributing factors included expectations of peak summer fuel demand leading to a supply deficit, OPEC+ maintaining production cuts until October, and potential disruptions to US oil flows from the Atlantic hurricane season. Additionally, the UK Labour Party’s manifesto, proposing to extend and increase the Energy Profits Levy and remove investment allowances, could exacerbate supply shortages by discouraging necessary investments.


UK house prices continued to tick up in June despite high mortgage rates. The annual growth rate increased from 1.3% in May to 1.5% in June, according to Nationwide. Despite the fact that wage growth has outpaced house price growth in recent years, it hasn’t offset the impact of higher mortgage rates. The general election announcement triggered a temporary drop in demand as the market holds its breath for potential housing policy changes.

In the US, high mortgage rates and elevated construction financing costs led to a drop in housing starts and building permits in May, reaching their lowest levels since 2020. This also resulted in a decrease in pending home sales, which came in well short of market expectations. Existing home sales also declined for the third consecutive month. This renewed decline in new construction poses another challenge to the US economy, especially as consumer spending growth cools.

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Important Information

All Index data figures are sourced by Morningstar and correct as at 30 June 2024, unless otherwise stated.

The value of investments or any income arising from them may fluctuate and are not guaranteed. Past performance is not necessarily a guide to future performance.