Market Review June

UK

The FTSE All-Share Index rose 1.5% in sterling terms during June. The UK economy shrank by more than expected over the first quarter, contracting 2.2% as the COVID-19 pandemic continued. GDP also fell by a record 20.4% in April month on month. On the plus side, data suggested UK coronavirus infections continued to fall over June. Having allowed non-essential retailers to reopen for business in June, the UK government gave the green light for the likes of pubs and restaurants to open their doors on July 4. Nevertheless, the risk of countermeasures to address local flare-ups was highlighted towards month-end as the authorities announced tighter restrictions for Leicester owing to a rise in local infections. In terms of sectors, life insurance (12.3%) outperformed while health care, equipment and services (-6.7%) lagged.

FTSE All-Share Total Return (TR) GBP (%)*

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Europe

The FTSE World Europe ex-UK Index advanced 4.9% in sterling terms. Monthly survey data pointed to further falls in overall eurozone manufacturing and services activity in June, though at a more moderate pace than in May. German and French surveys showed a sharp upturn in business sentiment in June, reflecting the recent relaxation in COVID-19 containment measures. Data showed eurozone industrial production slumped by 17.1% in April, when lockdowns were still at their height. The European Central Bank announced it would extend its quantitative easing programme, with the purchase of an additional €600bn in bonds. Germany unveiled fresh measures to kickstart its economy, including a 3% cut in VAT and one-off payments to families of €300 per child. France announced an extension of its COVID-19 job retention scheme for up to two years.

FTSE World Europe ex UK TR GBP (%)*

US

The FTSE All-World North America Index gained 2.4% in sterling terms over June. US jobs numbers for May surprised on the upside, with 2.5m jobs added as the US economy began to reopen, and unemployment easing to 13.3% in May from 14.7% in April. US retail sales soared 17.7% in May as non-essential stores reopened and US consumers resumed discretionary instore purchases. The Federal Reserve (Fed) forecast US interest rates would need to stay at near zero until the end of 2022 to bring unemployment back down to pre-coronavirus crisis levels,
while Fed chair Jay Powell stressed the nature of US economic recovery appeared highly uncertain. Towards month-end, certain US states began to reimpose some COVID-19 containment measures in response to a surge in new infections.

FTSE All-World North America TR GBP (%)*

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*Source: Lipper to 30 June 2020, total return. Indices rebased to zero at 29 May 2020.

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