Investors continued to favour large-cap, growth-orientated stocks in June as the tech-heavy US and Japanese stock indices dominated equity returns during the month.
The S&P 500 index, which tracks the largest companies in the US, has climbed nearly 17% since the start of the year, skewed upwards by the surging valuations of large tech companies such as Nvidia and Meta Platforms, which are up 190% and 138% respectively year-to-date.
Meanwhile the FTSE 100 index, which tracks the largest UK stocks, has had a more muted year due to its lack of tech exposure and a rising valuation of the pound. Large-cap UK stocks have returned a little over 3% since the start of January, while medium and smaller companies have picked up less than 1%. The UK market suffered another setback during the month as inflation figures showed the Consumer Prices Index static on 8.7% at the end of May, defying expectations it would continue to drop. In response the Bank of England pushed the UK’s base interest rate to 5%, marking the thirteenth rate hike in eighteen months.
Full round-up of June market performance
In the UK, the FTSE 100 index climbed 1.40% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, returned -1.25% and 0.41%. In the US, the S&P 500 USD index rose 6.61% while in Europe the Eurostoxx 50 EUR index picked up 4.35%. Japanese stocks measured by the Topix JPY index surged 7.55%.
Emerging markets returns were mostly positive, with the MSCI Emerging Markets index rising 3.54% in local currency terms. Chinese stocks measured by the MSCI China CNY index recovered 4.40%. Meanwhile Indian stocks measured by the Nifty 50 INR index rose 3.53% and Latin American equities, measured by the MSCI Latin America local currency index, gained 6.88%.
In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, fell 0.41%, although long dated (over 15 years to maturity) gilts crept up 1.63%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, decreased 1.23%. In the high yield market, the Bank of America Merrill Lynch Sterling High Yield index returned -0.04%.
In the commodities market, the S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, gathered 4.39%. Crude oil futures amassed 3.75% during the month. Returns were mixed in the agricultural markets, with corn and wheat futures moving -6.65% and 7.07% in USD respectively. In the precious metals markets, the S&P GSCI Gold and Silver indices declined 2.23% and 2.86% in USD respectively.
In the currency markets, it was a mostly positive month for the pound as it appreciated 2.11% versus the US dollar and 5.67% against the yen but slipped 0.02% versus the euro.