Global shares climbed in June, bringing the second quarter as a whole to a positive end. The main exception was China and Hong Kong – although the Hang Seng index added 3,74% in June, the index dropped 7,27% from April through June combined on disappointing economic data despite post-COVID reopening and weakening investor appetite, in part due to geopolitical tensions.

US equities ended the quarter higher, with the bulk of the gains made in June. In June the Dow Jones gained 4,54%, the S&P500 6,47% and Nasdaq Composite 6,59%. The dollar on the other hand lost 2,08% against the Euro to close at 1,091 USD/EUR, partially reducing the stock index gains in Euro terms.

A revision to Q1 GDP growth indicated expansion of 2% annualised, substantially more than the previous estimate of 1.3% growth. After a 0,25 percentage point increase to 5,25% in May, the Federal Reserve did not hike the interest rate in June – its first pause since January 2022 when the interest rate stood at just 0,25%. FED chair Jerome Powell however hinted at further increases in 2023, keeping investors on edge.

US inflation declined to 4,0% in May, slightly below expectations and down from 4,9% in April. Core inflation however is more sticky and fell a modest 0,2 percentage points to 5,3%. The US labour market remains tight with strong numbers in non-farm payrolls (new jobs) but nonetheless some weakness is becoming evident as the unemployment rate increased from 3,4% to 3,7%.

Eurozone indices also closed in positive territory in June with the DAX, Eurostoxx and CAC40 indices gaining 3,09%, 4,29% and 4,25% respectively. The Slovene SBITop index gained a modest 0,64% to close at 1232,57.

The European Central Bank (ECB) raised the interest rate once more in June, adding 0,25 percentage points to bring it to 4,00%. Also in the Eurozone inflation continues to decline, dropping to 5,5% from 6,1% in May. However, the sticky core inflation rate modestly increased to 5,4% from 5,3% in May, putting it in line with the US core inflation rate. As Q4 2022 and Q1 2023 GDP growth were both revised down to -0,1%, the Eurozone experienced a mild recession. All eyes are now on the Q2 2023 number which will first be released on July 31 to confirm whether or not the recession gets confirmed.

The strong momentum for Japanese shares accelerated in June with the Nikkei index gaining another 7,45% in June and hitting a 33-year high. Over the entire quarter the Nikkei gained 18,36%, The Yen however continues its devaluation against the Euro and dollar.

In the commodities market, precious metals lost some ground with gold dropping 2,66% to 1929,4 dollars per ounce. Natural gas climbed 23,48% to 2,798 Mmbtu (One million British Thermal Units), which may appear as a steep increase but is still at pre-COVID levels and well below last year's high of 9127 Mmbtu. Oil gained 3,75% to 70,64 dollars per barrel.

Rudy Marchant
Fund manager Primorski skladi

Monthly reports 2023