As we reach the mid-point for the year, leaving behind a half most would rather forget and looking forward to a half in which central bank quantitive tightening is about to really pick up, Deutsche Bank’s Jim Reid writes that markets spent most of the month of June flip-flopping between constantly evolving trade-war related headlines, as well as digesting the diverging path of a more hawkish than expected Fed versus a more dovish than expected ECB following their respective policy meetings.
While the majority of assets ended the month with a negative total return (24 out of 39 in local currency terms and 26 out of 39 in dollar terms), the heaviest falls were reserved for Emerging Markets assets in particular.
Meanwhile, at the top of the leaderboard the clear winner in June was WTI Oil (+10.6%) which benefited from the latest OPEC decision to only gently reintroduce supply back into the market.
June performance charts as shown below:
Focusing on Q2 more broadly, the picture looks slightly weaker according to Deutsche. In local currency terms, 16 assets finished in positive territory versus 23 in negative.
However the stronger USD (+5.2% versus the Euro, +4.0% versus the Yen and +5.8% versus Sterling) means that the picture is more stark in dollar adjusted terms with only 9 assets returning a positive total return, versus 30 delivering a negative return.
Finally, for the first half of the year through June we’re now at 15 assets in positive territory in local currency terms but just 8 in dollar terms. WTI (+22.7%) and Brent (+22.3%) also top this leaderboard while at the other end the Shanghai Comp (-12.9%), Copper (-10.6%), European Banks (-9.8%) and EM Equities (-6.6%) have been the big underperformers.
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