Market Review June

Market Review June

Global equities made good gains in sterling terms over June. US equities outperformed against further evidence of a strengthening US economic recovery. Although US headline inflation reached 5% in May, up from 4.2% in April, investors opined that the spike in consumer prices would prove transitory.

US Treasury yields fell over June as 10-year US inflation expectations eased. Within emerging markets, Brazil and Russia were the top performers over the month as they received a boost from rising oil prices. Europe ex UK equities trailed the global average, despite the eurozone economy continuing to recover strongly in June. The UK also lagged, with rising coronavirus cases prompting the UK government to delay plans to end all social restrictions by a month. Global government bond yields eased modestly over June.


The FTSE All-Share Index returned 0.2% in sterling terms during June. Rising coronavirus cases prompted the UK government to delay plans to end all social restrictions by a month, pushing back the final phase of reopening to July 19. Monthly Purchasing Managers’ survey gauges for manufacturing and services suggested the UK economy continued to expand sharply in June, though were slightly off the highs seen in the prior month. UK inflation surprised on the upside, jumping to 2.1% in May versus 1.5% in April. The Bank of England’s Monetary Policy Committee forecast inflation to move beyond 3% this year, before retreating below its 2% target relatively quickly. In terms of sectors, technology hardware & equipment (16.4%) and waste & disposal services (7.8%) outperformed, while precious metals & mining (-9.8%) and banks (-7.3%) trailed.


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Past performance is not a guide to future performance. The value of all stock market investments can go down as well as up and you may not get back the full amount originally invested. 

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

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


The FTSE World Europe ex-UK Index returned 1.8% in sterling terms. The eurozone economy continued to recover strongly in June, with the eurozone’s composite Purchasing Managers’ Index reaching its highest level since 2006. The manufacturing activity component reached its best level on record as new export orders surged. Figures showed eurozone inflation had jumped to 2% in May versus 1.6% in April, though preliminary data for June suggested it had subsequently eased to 1.9%. The European Central Bank pledged to maintain its current pace of quantitative easing, indicating that it expected inflationary pressures to subside next year. Germany agreed a draft budget that will see it borrow an additional €100bn in 2022 as the country continues to grapple with the fallout from the coronavirus crisis and looks to support economic recovery.

FTSE World Europe ex UK TR GBP (%)*

Chart FTSE World Europe ex UK TR GBP (%)*


The FTSE All-World North America Index returned 5.6% in sterling terms over June. US labour market data provided further evidence of a strengthening US economic recovery, with 559,000 jobs created in May versus April’s 278,000 tally. Unemployment eased to 5.8% compared with 6.1% in the prior month. Separate data showed that US inflation had soared to 5% in May from 4.2% in April against expanding consumer demand as the economy reopens. There was evidence that higher commodity prices, supply shortages and rising wages were feeding through to US consumer prices. However, investors opined that the inflationary spike would prove transitory, with 10-year US inflation expectations declining over June. Nevertheless, the Federal Reserve indicated it would likely begin to raise interest rates in 2023, having previously projected rate tightening to start in 2024.

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

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

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*Source: Lipper to 30June  2021, total return. Indices rebased to zero at 31 May 2021.

Views and opinions have been arrived at by BMO and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

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