In June, global equities continued to rise. This was due to strong corporate earnings and progress in controlling inflation. Notably, headline inflation in the US fell to 3.3% year-on-year and the US unemployment rate rose to 4.0% for the first time since January 2022. This gave hope that the economy, while slowing down, would keep inflation in check without causing a recession. Central banks made several moves in June. The European Central Bank (ECB) and Bank of Canada both lowered interest rates for the first time since 2019 and 2020, respectively. Additionally, the Swiss National Bank cut rates for the second time in a row, while the US Federal Reserve and Bank of England both kept interest rates unchanged.

Emerging markets outperformed developed markets. Emerging markets returned 4.3%, while developed markets registered a 2.3% gain. Developed markets boast advanced economies, well-established infrastructure, mature capital markets, and higher standards of living. Emerging market economies refer to countries that are in the process of transitioning into developed market economies. These countries possess some, but not all, of the characteristics typically associated with developed markets. US equities continued to impress, returning 3.5%. Both the Standard and Poor’s 500 Index (S&P 500) and Nasdaq, which are important stock market indicators in the US, reached their highest levels in a year. Outside of the US, Europe had a tough time as major countries like France saw significant declines in their stock market, mainly due to political uncertainty.

The US dollar (USD) appreciated against most major currencies in the month of June. The Japanese yen (JPY) was especially weak and reached a new low against the USD, even lower than the level that caused the Bank of Japan to intervene in the past. The New Zealand dollar (NZD) had a mixed performance, decreasing by 1.2% against the Australian dollar (AUD) and 0.8% against the USD, but was up 1.5% and 0.5% against the JPY and EUR, respectively. 

Significant developments for June:

• The ECB cut interest rates by 25 basis points to 3.75%, making it one of the first developed regions to start lowering interest rates in this cycle. The bank stated that the decision to cut rates was in response to a 2.5% decrease in Eurozone inflation since the last rate increase in September 2023.
• The New Zealand economy exited a short-lived technical recession after delivering a positive 0.2% increase in Gross Domestic Product during the March 2024 quarter.
• President Macron announced a snap election in France in response to the outcome of the European parliamentary election. Market concerns regarding the potential outcome led to significant volatility and a decline in the French equity market in June, which had a negative impact on broader European returns.