Throughout June, there was general disinterest in the markets and a lack of confidence amid mixed economic signals. The VIX reflected this and it remains well below its long-term average at 13.59.
The uncertain geopolitics took a left-field turn on 23 June with the Russia coup led by Wagner Group and Yevgeny Prigozhin. It quickly fizzled out and markets hardly moved, but it showed the fluidity of the situation.
Over at the central banks, the hawks were leading from the front. Inflation may be easing but it is still far too elevated. There is a higher-for-longer belief, particularly in the UK, which is suffering from stubbornly unmoving inflation. Germany is also suffering, which is not helping business morale according to ifo.
With the hawks in charge, there are signs of divergence among banks - the Fed pressed pause on rate rises this month while the ECB and Bank of England continued upping the ante. They have all made it clear that there is further to go, with the ECB taking note of the UK situation, the good money on Bank of England taking rates to 6%, and the Fed emphasising that this was merely a temporary "pause." Ultimately, this situation has no quick fix - instead, it is to batten down the hatches and wait for further rate rises.
Equity markets ignored these threats to close the month in positive territory, with the S&P 500 up 6.4% and Nasdaq up 6.6%. In fact, the Nasdaq had its strongest half-year since 1983, up 31.7%. The FTSE 100 was more muted, partly due to the general level of disinterest in UK stocks and heavy weighting to commodities and services. The DAX was up 3.1%, while the Nikkei 225 was up 7.5%, driven by the Bank of Japan's continued low-interest rate policy and influx of foreign investors.
Oil was very choppy in June as it followed China and US weakness, plus general concern about a global slowdown, but still closed the month up, with WTI and Brent up 4.1% and 3.1%, respectively. Gold and silver, however, fell on recessionary concerns and rate rises, down 2.8%.
Crypto was on a roll as investors piled back in, encouraged by the institutional backing of Fidelity, Schwab and Citadel, and the belief that the first spot bitcoin ETFs will get the go-ahead from the SEC. This was crypto’s best month for a while, with Bitcoin up 12.6%, taking its year-to-date performance to 84%.