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.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
