Senior Investment Editor
Summary: The global financial situation grows increasingly concerning, which is evident in this month’s financial performance as equities, bonds and commodities all end in minus.
Global equities fell more than six percent. This could indicate that the events that have dominated 2022, i.e., the Russian invasion of Ukraine, supply chain issues, commodity and energy shortages, which among other things have driven up inflation to numbers we haven’t seen in several decades are still prevalent.
All equity regions fell more than five percent. The Western world suffered the biggest losses, whereas Asia and Emerging Markets performed slightly less negative.
Within the equity sectors, there are big differences. Most notably, while the energy sector was the best performer in May, it is now the second-worst performer. The fall can probably be attributed to a very sharp increase previously in the year and the increased fear of recession, especially in the US, which could lead to less energy consumption. The sector is still the best performer for the year.
Commodities fell by more than seven percent in June. Some of the reasons for this are that a global recession could lead to less demand for core commodities, as well as prolonged lockdowns in China. While oil and gold fell less, there was negative performance across almost the entire commodity scale. Natural gas, wheat and cotton were among the worst performers.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
