Executive Summary

June 2024 marked an important milestone in the global monetary cycle as the European Central Bank became the first major developed-market central bank to begin reducing interest rates. While inflation continued to ease across much of Europe, policymakers remained cautious, emphasising that further reductions would depend entirely upon incoming economic data rather than a predetermined easing cycle. Financial markets welcomed the initial cut but quickly shifted their attention towards political developments, particularly in France, where President Emmanuel Macron unexpectedly called a snap parliamentary election following significant gains by the National Rally party during the European Parliament elections.

In the United States, markets remained resilient despite the Federal Reserve adopting a more cautious outlook than investors had anticipated. At its June meeting, policymakers left the federal funds target range unchanged at 5.25%–5.50%, but the updated Summary of Economic Projections reduced expectations for 2024 interest-rate cuts from three to just one. Although inflation had moderated compared with earlier in the year, labour markets remained relatively strong and officials continued to argue that additional confidence was required before monetary easing could begin.

Equity markets continued their impressive advance during June, supported primarily by ongoing enthusiasm surrounding artificial intelligence and semiconductor investment. Nvidia briefly overtook Microsoft to become the world's most valuable publicly traded company, highlighting the extraordinary investor demand for businesses positioned to benefit from AI infrastructure spending. Technology shares once again significantly outperformed most other sectors, although the concentration of market returns within a handful of mega-cap companies became an increasing topic of discussion among institutional investors.

European equity markets experienced considerably greater volatility. Although lower interest rates provided support for economically sensitive sectors, political uncertainty in France caused government bond yields to rise sharply and weighed heavily on French banking shares. Investors questioned whether a potential change in government could significantly alter fiscal policy, taxation and European Union relations.

The United Kingdom continued to demonstrate encouraging progress. Inflation finally returned to the Bank of England's 2% target for the first time in almost three years, strengthening expectations that monetary easing could begin during the second half of 2024. Nevertheless, policymakers maintained Bank Rate at 5.25%, preferring to observe additional evidence that services inflation and wage growth were also moving sustainably lower. The announcement of the UK General Election dominated domestic political attention throughout the month.

China continued introducing selective measures intended to stabilise its struggling property market, although investor confidence remained fragile. Manufacturing activity softened slightly while exports remained relatively resilient. Trade tensions with the United States and Europe continued to intensify following new tariffs targeting Chinese electric vehicles, batteries and semiconductor-related products.

Japan remained one of the year's strongest-performing developed equity markets despite increasing volatility in the Japanese yen. Investors continued monitoring whether the Bank of Japan would gradually reduce government bond purchases following March's historic exit from negative interest rates. Corporate governance reforms, rising shareholder returns and improving profitability continued supporting long-term optimism towards Japanese equities.

Government bond markets produced mixed returns during June. The ECB's rate cut initially supported European sovereign debt, although French political uncertainty subsequently caused spreads between French and German government bonds to widen considerably. US Treasury yields remained volatile following stronger-than-expected employment data and the Federal Reserve's revised policy outlook.

Commodity markets were similarly mixed. Oil prices recovered modestly after OPEC+ confirmed that existing production cuts would remain in place during the near term before gradually unwinding from late 2025 if market conditions permitted. Gold traded within a relatively narrow range as investors balanced lower inflation against expectations for higher-for-longer US interest rates. Copper retreated from May's record highs as speculative positioning eased.

Digital assets experienced a comparatively quieter month. Bitcoin consolidated following its strong performance earlier in the year, while Ethereum continued benefiting from optimism surrounding the eventual launch of US spot Ether exchange-traded funds following the SEC's approval of exchange rule changes during May.

Private equity activity continued improving gradually as financing markets reopened and public equity valuations strengthened. Infrastructure, artificial intelligence, energy transition and private credit remained among the most active investment themes globally, while fundraising conditions continued favouring experienced managers with established track records.

Key Themes During June

• The European Central Bank delivered its first interest-rate cut since 2019.
• The Federal Reserve reduced projected 2024 rate cuts from three to one.
• French political uncertainty created volatility across European markets.
• UK inflation returned to the Bank of England's 2% target.
• Nvidia briefly became the world's most valuable listed company.
• Artificial intelligence remained the dominant global investment theme.
• Japanese corporate reforms continued supporting investor confidence.
• China introduced additional property-market support while trade tensions intensified.
• Private equity deal activity continued recovering.
• Investors increasingly focused upon the pace rather than the timing of future global monetary easing.

Global Economic Overview

June represented an important transition point for the global economy. Inflation had declined substantially across most developed markets compared with the peaks experienced during 2022 and early 2023, allowing policymakers to begin discussing monetary easing. However, economic growth remained stronger than many central banks had expected, preventing an aggressive reduction in interest rates. Instead, officials increasingly adopted a cautious, data-dependent approach that prioritised inflation credibility over rapid economic stimulus.

Global growth remained uneven. The United States continued outperforming most developed economies through resilient household spending and business investment, while Europe gradually emerged from stagnation. The United Kingdom showed encouraging signs of recovery after its brief technical recession, whereas China's economy remained heavily dependent upon manufacturing exports and government support as domestic consumer confidence remained subdued.

United States

The Federal Reserve maintained the federal funds target range at 5.25%–5.50% during its June meeting, extending the period of restrictive monetary policy that had been in place since July 2023. Although inflation continued moderating, officials concluded that additional evidence was required before reducing borrowing costs.

The meeting's most significant development came through the updated Summary of Economic Projections. Policymakers revised their median expectation for 2024 from three quarter-point rate reductions to just one, reflecting stronger-than-expected economic activity and slower progress on inflation during the first half of the year.

Chair Jerome Powell continued emphasising that monetary policy remained restrictive and that further decisions would depend entirely upon incoming economic data. He also acknowledged that inflation had improved considerably over the previous two years but remained above the Federal Reserve's long-term objective.

US Inflation

Inflation data released during June provided encouraging news for financial markets. The May Consumer Price Index surprised positively, with headline inflation remaining unchanged month-on-month while annual inflation continued gradually declining. Core inflation also slowed more than economists had anticipated.

The softer inflation report temporarily increased expectations that the Federal Reserve could begin easing policy during September, although policymakers remained cautious given the stronger inflation readings experienced earlier in the year.

Shelter costs continued representing the largest contributor to overall inflation. Policymakers remained confident that housing inflation would continue slowing as newer rental data gradually filtered into official statistics.

US Labour Market

The labour market remained resilient throughout June. Non-farm payrolls again exceeded expectations, demonstrating that businesses continued hiring despite elevated borrowing costs. Nevertheless, the unemployment rate edged slightly higher while job openings continued gradually normalising.

Wage growth moderated modestly but remained above levels generally considered consistent with long-term 2% inflation. Labour shortages became less acute across several sectors, although healthcare, construction and skilled manufacturing continued reporting recruitment difficulties.

Eurozone

The European Central Bank became the first major developed-market central bank to reduce interest rates during the current monetary cycle. Policymakers lowered all three key interest rates by 25 basis points, reflecting significant progress on inflation since 2022.

President Christine Lagarde stressed that the decision should not be interpreted as the beginning of a rapid easing cycle. Instead, future meetings would remain entirely data dependent, with particular attention focused upon wage growth, services inflation and labour-market conditions.

Eurozone economic growth continued improving gradually. Manufacturing remained relatively subdued while services activity strengthened, supported by improving consumer confidence and rising real household incomes.

France

France unexpectedly became the principal source of European market volatility during June after President Emmanuel Macron dissolved the National Assembly and announced snap parliamentary elections following the European Parliament elections.

The announcement significantly increased uncertainty regarding future fiscal policy. Investors became concerned that either political extreme could pursue substantial increases in public spending, potentially widening France's already significant budget deficit.

French government bond yields rose sharply relative to German Bunds, creating the largest spread between the two countries for many years. French banking shares also declined as markets reassessed political and sovereign-risk exposure.

Germany

Germany's economy continued showing tentative signs of recovery following its prolonged manufacturing slowdown. Business confidence improved modestly, although industrial production remained weaker than policymakers would ideally prefer.

Lower inflation supported household purchasing power, while improving international demand gradually benefited exporters. Nevertheless, structural challenges including energy costs, demographics and industrial competitiveness continued limiting longer-term growth expectations.

United Kingdom

The United Kingdom achieved an important milestone as headline inflation returned to the Bank of England's 2% target for the first time since July 2021. Falling energy prices and moderating food inflation contributed significantly to the improvement.

Despite this progress, the Monetary Policy Committee voted to maintain Bank Rate at 5.25%. Policymakers remained concerned that domestic inflationary pressures, particularly services inflation and wage growth, continued running above levels consistent with long-term price stability.

The announcement of the General Election dominated political attention throughout June. Financial markets remained relatively calm, with both major political parties emphasising fiscal responsibility and macroeconomic stability.

Economic activity continued improving gradually. Retail sales recovered from earlier weakness while business confidence surveys suggested increasing optimism regarding the second half of the year.

China

China's economic recovery remained uneven. Industrial production and exports continued providing the strongest sources of growth, while domestic consumption and the residential property market remained subdued despite additional government support measures.

Authorities continued encouraging local governments and state-owned enterprises to purchase unsold residential properties from distressed developers. While these initiatives demonstrated greater policy determination, investors remained uncertain whether the measures would prove sufficiently large to stabilise housing prices nationwide.

Trade tensions with Western economies intensified further following new tariffs announced by both the United States and continuing investigations within Europe concerning Chinese electric vehicles.

Japan

Japan continued benefiting from improving corporate profitability, shareholder-focused governance reforms and increasing international investor interest. Inflation remained above the Bank of Japan's long-term target, although policymakers continued emphasising a gradual normalisation of monetary policy.

The Japanese yen remained historically weak against the US dollar, increasing speculation that authorities could intervene again if currency weakness became disorderly. Nevertheless, exporters continued benefiting from favourable exchange rates while domestic consumers experienced higher import prices.

Global Economic Outlook

By the end of June, the global economy appeared increasingly capable of achieving a relatively soft landing. Inflation had moderated sufficiently for monetary easing to begin in Europe, while economic growth remained sufficiently resilient to avoid widespread recession.

Nevertheless, several significant risks remained. Political uncertainty in Europe, elevated government debt levels, continuing geopolitical conflicts, increasing trade protectionism and exceptionally high equity valuations all had the potential to generate renewed market volatility during the second half of 2024.

For investors, June reinforced the importance of maintaining diversified portfolios capable of performing across multiple economic scenarios. Although optimism surrounding lower inflation remained justified, central banks clearly demonstrated that policy easing would proceed far more gradually than markets had expected at the beginning of the year.

Equity Markets

Global equity markets advanced during June 2024, although headline index performance concealed a significant divergence between regions, sectors and individual companies. US technology shares continued to deliver exceptional returns, while political uncertainty placed pressure on French and broader European assets. UK equities declined modestly after the record highs reached during May, and smaller companies generally lagged the largest technology-led indices.

The MSCI World Index advanced during the month and completed a strong first half of the year. Global equities had benefited from resilient economic growth, moderating inflation and the continuing expansion of artificial-intelligence investment. However, the concentration of returns among a small number of US mega-capitalisation companies became increasingly pronounced.

Market-capitalisation-weighted indices substantially outperformed their equally weighted equivalents. This demonstrated that the largest companies, rather than the average listed business, were responsible for a significant proportion of the market's advance. Investors therefore entered the second half of 2024 balancing confidence in strong corporate earnings against concern that valuations and portfolio concentration had become increasingly demanding.

United States

US equities recorded another positive month and remained the strongest major developed market. The S&P 500 gained approximately 3.5%, while the Nasdaq Composite advanced by around 6.0%. The Dow Jones Industrial Average produced a much smaller return as investors continued to favour technology and communication-services companies over more traditional industrial and defensive businesses.

The S&P 500 established several new record highs during June and completed its strongest first half of a year since 2019. The index had gained approximately 14.5% during the first six months of 2024, excluding dividends, supported by robust earnings and continued enthusiasm surrounding artificial intelligence.

The Nasdaq Composite produced an even stronger first-half return because of its substantial exposure to semiconductors, cloud computing, digital advertising and software. Investors continued to assign premium valuations to businesses expected to benefit from increasing demand for computing capacity and generative-AI services.

Artificial-Intelligence Leadership

Artificial intelligence remained the most influential force within US equity markets. Demand for advanced processors, networking equipment, high-bandwidth memory and data-centre infrastructure supported companies throughout the semiconductor supply chain.

Nvidia continued its exceptional advance and briefly became the world's most valuable publicly listed company on 18 June. Its market capitalisation rose above approximately $3.3 trillion, overtaking Microsoft and Apple.

The company's share price had increased rapidly because of demand for graphics processors used to train and operate large artificial-intelligence models. Major cloud providers, technology companies, governments and research institutions continued to compete for access to the latest generation of advanced processors.

Nvidia's influence extended considerably beyond its own shareholders. Because the company had become one of the largest constituents of the S&P 500 and Nasdaq, movements in its share price had a substantial effect on the performance of both indices.

The company completed a ten-for-one share split during June. The split did not change Nvidia's underlying value but reduced the nominal price of each share, making it more accessible to smaller investors and employees participating in share-based compensation programmes.

Nvidia's leadership also supported suppliers and related businesses. Semiconductor foundries, memory manufacturers, networking companies, advanced-packaging specialists and providers of chip-manufacturing equipment benefited from expectations of continued AI infrastructure spending.

Semiconductors

Semiconductor shares generally outperformed the wider market. Demand remained strongest for companies exposed to data-cententre processors, high-bandwidth memory, networking and advanced manufacturing.

Broadcom attracted investor interest because of its networking products and work designing custom artificial-intelligence processors for large technology companies. Custom chips represented a potential alternative or complement to general-purpose graphics processors, particularly for businesses operating large and specialised workloads.

Micron Technology benefited from improving memory-market conditions and demand for high-bandwidth memory used alongside advanced AI processors. Supply constraints supported pricing expectations, although the capital-intensive and cyclical nature of memory manufacturing remained an important risk.

Manufacturers of semiconductor equipment continued to benefit from investment in new production capacity. Governments in the United States, Europe and Asia were supporting domestic manufacturing to reduce dependence upon geographically concentrated supply chains.

Despite the positive long-term outlook, semiconductor valuations incorporated substantial growth expectations. The sector remained vulnerable to changes in customer expenditure, product delays, export restrictions and evidence that supply was expanding more rapidly than demand.

Microsoft

Microsoft remained one of the world's largest companies despite briefly surrendering the leading position to Nvidia. Investors continued to view the company as one of the most direct software and cloud beneficiaries of generative AI.

Microsoft integrated AI assistants into productivity software, development tools, cybersecurity products and its Azure cloud platform. Its investment in OpenAI provided access to advanced models and helped the company introduce generative functionality across a broad existing customer base.

Azure benefited from businesses requiring computing capacity to build and operate AI applications. However, Microsoft also committed substantial capital to data centres, processors and electricity infrastructure. Investors increasingly assessed whether future AI-related revenue would justify the scale of this expenditure.

Apple

Apple shares advanced after the company introduced its Apple Intelligence strategy during its annual developer conference. The announcement described generative-AI features intended to operate across the company's devices and software ecosystem.

Apple emphasised privacy and on-device processing, with more demanding requests handled through secure cloud infrastructure. The company also announced integration with OpenAI's ChatGPT for selected user requests.

Investors interpreted the strategy as a potential catalyst for future device upgrades. New AI features could encourage customers to replace older smartphones, tablets and computers that lacked the necessary processing capability.

However, the commercial effect remained uncertain. The features required staged implementation, and Apple needed to demonstrate that AI functionality provided sufficient practical value to generate a meaningful replacement cycle.

Alphabet

Alphabet continued to benefit from resilient digital advertising and increased demand for Google Cloud. The company integrated generative AI into search, productivity tools and enterprise cloud services.

Investors considered both the opportunity and risk created by changes to internet search. Generative responses could improve the user experience but potentially alter the established advertising model that generated a substantial proportion of Alphabet's revenue.

The company's extensive data, distribution and computing infrastructure provided important competitive advantages. Nevertheless, competition from other model developers and regulatory scrutiny of digital advertising remained significant considerations.

Amazon

Amazon remained supported by improving profitability within its retail operations and continued growth at Amazon Web Services. The cloud division invested heavily in generative-AI infrastructure and introduced services allowing customers to access multiple model providers.

The company's strategy emphasised customer choice rather than dependence upon a single AI system. Amazon also developed proprietary processors intended to reduce the cost of training and inference.

Retail margins benefited from logistics improvements, regional fulfilment networks and greater operating efficiency. Advertising continued to represent an increasingly important and profitable source of revenue.

Meta Platforms

Meta Platforms continued to invest heavily in artificial intelligence to improve advertising, content recommendations and user engagement. The company's open-model strategy sought to encourage developers to build applications using its technology.

Artificial intelligence supported the efficiency of digital advertising by improving targeting and helping businesses generate promotional content. These applications had a clearer near-term connection to revenue than many more experimental uses of generative AI.

Capital expenditure remained substantial because Meta required advanced processors and data-centre capacity. Investors continued to evaluate whether stronger advertising performance would offset the cost of infrastructure and continued losses within the Reality Labs division.

Tesla and Electric Vehicles

Tesla and the wider electric-vehicle sector remained volatile. Global demand growth had moderated, while competition and price reductions placed pressure on profitability.

Tesla continued to emphasise autonomous driving, artificial intelligence and a proposed lower-cost vehicle platform. Investors debated whether the business should be valued primarily as an automobile manufacturer or as a future provider of software, robotics and autonomous transport.

Traditional vehicle manufacturers continued expanding electric offerings but faced slower adoption in parts of Europe and North America. High vehicle prices, charging availability and interest rates affected consumer demand.

Chinese manufacturers remained highly competitive, particularly in lower-cost models and battery technology. Higher US tariffs and prospective European restrictions created uncertainty regarding international expansion.

Communication Services

Communication-services companies generally performed well because of their exposure to digital advertising, streaming and artificial intelligence. Online advertising remained resilient as businesses continued directing spending towards measurable digital channels.

Streaming businesses focused increasingly upon profitability rather than subscriber growth alone. Pricing increases, advertising-supported subscriptions and limits on password sharing helped improve revenue per customer.

Traditional media businesses faced greater difficulty because of declining television audiences, changing advertising behaviour and the substantial cost of sports and entertainment content.

Consumer Discretionary

Consumer-discretionary performance was mixed. Higher-income households continued to spend on travel, entertainment and premium products, while lower-income consumers experienced greater pressure from housing, food and credit costs.

Retailers reported substantial differences according to customer profile. Discount and value-focused businesses generally performed more strongly than companies dependent upon discretionary purchases by financially constrained households.

Travel demand remained resilient, supporting airlines, hotels and online-booking platforms. However, labour and fuel costs affected profitability, while consumers became more selective regarding prices.

Consumer Staples

Consumer-staples companies generally lagged the technology-led market. Their defensive earnings provided stability, but investors favoured sectors offering stronger growth.

Food and household-goods companies continued to balance pricing with declining volumes. The exceptional price increases implemented during the inflationary period became more difficult to repeat as consumers traded down or changed brands.

Businesses with strong distribution, established brands and exposure to growing emerging markets remained comparatively well positioned. However, higher bond yields reduced the relative appeal of stable dividend-paying shares.

Financials

US financial shares produced mixed returns. Large banks remained supported by resilient economic activity, stable employment and improving capital-market conditions.

Investment-banking pipelines showed signs of recovery as equity issuance, mergers and acquisitions and debt refinancing increased. Strong public markets encouraged companies and sponsors to reconsider transactions postponed during the previous two years.

Commercial banks continued to benefit from elevated lending rates but faced pressure from higher deposit costs. Customers increasingly moved cash towards money-market funds and higher-yielding accounts, reducing the benefit banks received from low-cost deposits.

Commercial real estate remained a concern, particularly among smaller and regional banks with substantial exposure to office properties. Falling valuations and refinancing at higher interest rates increased the probability of future credit losses.

Insurance companies benefited from higher investment yields and increased premium pricing. However, natural-disaster risk and rising repair costs remained important challenges within property and casualty insurance.

Industrials

Industrial shares underperformed the strongest technology businesses but remained supported by structural investment in manufacturing, defence, infrastructure and electricity networks.

Government incentives encouraged construction of semiconductor plants, battery facilities and clean-energy manufacturing within the United States. These projects created demand for engineering, construction equipment and industrial automation.

Aerospace companies benefited from strong travel demand and large order backlogs. However, supply-chain disruption, labour shortages and quality-control concerns limited aircraft production.

Defence contractors continued to benefit from increased government expenditure and the need to replenish equipment supplied to Ukraine. Production capacity and lengthy procurement processes restricted the speed at which orders could be converted into revenue.

Utilities and Power

Utilities attracted increased investor interest because artificial-intelligence data centres were expected to create substantial additional electricity demand. After decades of relatively stable consumption, US power requirements were forecast to increase through data centres, manufacturing, electric vehicles and the electrification of buildings.

Regulated utilities could benefit from investment in generation, transmission and distribution infrastructure. Their ability to earn returns depended upon regulatory approval and the treatment of costs within customer bills.

Independent power producers with nuclear, natural-gas or renewable assets attracted attention because technology companies required reliable electricity and sought long-term supply agreements.

The sector remained capital intensive and sensitive to interest rates. Utilities needed to finance substantial investment while maintaining affordable consumer prices and reliable service.

Energy

Energy shares generally lagged as oil prices produced a mixed monthly return. Investors assessed OPEC+ production policy, strong US supply and uncertainty regarding global demand.

Large integrated oil companies continued generating substantial cash flow and returning capital through dividends and share repurchases. Their diversified refining and chemicals operations provided some protection against changes in crude prices.

Oilfield-services companies benefited from international investment, although capital discipline among producers limited the rapid expansion historically associated with high prices.

Natural-gas businesses gained longer-term support from expected electricity demand and liquefied-natural-gas exports. Near-term prices remained influenced by weather, inventories and regional transport constraints.

Healthcare

Healthcare shares generally underperformed the technology-led index but offered defensive earnings and important long-term growth themes.

Demand for obesity and diabetes medicines remained exceptionally strong. Manufacturers invested heavily in production capacity to address shortages and expand access.

Biotechnology performance remained sensitive to clinical results, regulatory decisions and financing conditions. Higher interest rates continued to challenge early-stage businesses without commercial revenue.

Medical-device companies benefited from normalised procedure volumes following pandemic disruption. However, investors considered whether successful obesity treatment could reduce future demand for selected cardiovascular, orthopaedic and diabetes-related products.

Real Estate

Listed real-estate investment trusts produced mixed returns. Expectations of eventual interest-rate cuts supported the sector during parts of June, but high financing costs continued to affect valuations.

Data centres, logistics, residential rental property and healthcare facilities generally attracted stronger demand than traditional offices. Their long-term growth reflected digitalisation, e-commerce, housing shortages and demographic change.

Office properties remained divided according to quality and location. Modern buildings in attractive urban centres retained tenants more effectively, while older assets faced high vacancy and substantial refurbishment costs.

US Small-Capitalisation Companies

Small-capitalisation equities substantially lagged the S&P 500 and Nasdaq. The Russell 2000 produced a weaker return as investors continued to favour companies with large cash balances, high profit margins and direct exposure to artificial intelligence.

Smaller businesses were more sensitive to high interest rates because they frequently relied upon floating-rate bank borrowing or required refinancing more regularly than larger companies.

A greater proportion of small-cap index constituents were unprofitable, increasing their dependence upon capital markets. The delayed Federal Reserve easing cycle therefore created a more difficult environment.

Valuations remained low relative to large-cap shares, creating potential opportunities if economic growth remained resilient and borrowing costs eventually declined. However, investors required careful selection because weaker balance sheets and limited pricing power increased risk.

US Market Breadth

Market breadth weakened during June. Although the S&P 500 reached record highs, a substantial proportion of its constituents failed to participate fully in the advance.

The equal-weighted S&P 500 lagged the conventional market-capitalisation-weighted index. This demonstrated that the largest companies were responsible for a disproportionate share of performance.

Narrow leadership did not necessarily imply that an immediate correction was inevitable. The leading companies generated strong earnings and possessed substantial competitive advantages. Nevertheless, concentration increased the effect that any individual disappointment could have on index-level returns.

Institutional investors considered whether to maintain exposure to the strongest companies or rebalance towards cheaper sectors. Reducing exposure too early risked missing further gains, while allowing concentration to increase created portfolio and valuation risk.

US Valuations

US large-cap equity valuations remained above long-term averages. The premium was concentrated among technology and communication-services companies expected to generate exceptional earnings growth.

High valuations could remain sustainable where revenue, margins and cash flow continued to exceed expectations. However, they left less room for operational disappointment, regulatory intervention or changes in interest rates.

The valuation gap between the largest growth companies and smaller or more cyclical businesses remained substantial. This created opportunities for active investors but also reflected genuine differences in profitability, financial strength and competitive positioning.

Europe

European equities produced a weaker and more volatile month than their US counterparts. The STOXX Europe 600 was broadly flat to modestly positive, while French equities declined sharply following President Emmanuel Macron's decision to call a snap parliamentary election.

The month began with a supportive monetary development as the European Central Bank reduced its principal policy rates by 0.25 percentage points. The reduction had been widely anticipated and represented the first ECB rate cut since 2019.

Lower rates were expected to benefit property, household consumption and business investment over time. However, the ECB declined to commit to a rapid easing cycle because wage growth and services inflation remained elevated.

The positive monetary backdrop was overshadowed by political uncertainty. European Parliament elections produced strong results for nationalist and populist parties in several countries, increasing questions about future fiscal, trade and environmental policy.

France

France became the principal source of European market volatility after President Macron dissolved the National Assembly and called an election for 30 June and 7 July.

The decision followed a strong European Parliament election result for the National Rally. Investors considered the possibility that the party could form a government or gain sufficient parliamentary representation to restrict the president's domestic agenda.

The CAC 40 declined sharply and substantially underperformed the wider European market. The index entered a correction from the record highs reached earlier in the year.

French banks were among the weakest performers. BNP Paribas, Société Générale and Crédit Agricole declined as investors considered their exposure to the domestic economy, French government debt and potential changes in taxation or regulation.

Bank share prices were affected partly by the widening spread between French and German government bond yields. Banks held sovereign debt and were closely connected to domestic financial conditions, causing political risk to influence their valuations.

Infrastructure, utilities and concession businesses also came under pressure because investors considered the possibility of policy changes affecting regulated returns, public contracts and taxation.

Luxury-goods companies experienced additional weakness. These businesses were affected less directly by French politics because they generated revenue internationally, but uncertainty regarding Chinese demand and discretionary spending continued to influence performance.

France's fiscal position became a central concern. The country was already subject to European Union scrutiny because of its budget deficit, and investors feared that expensive election promises could make fiscal consolidation more difficult.

The possibility of a divided government created policy uncertainty even where the most expansionary proposals could not be implemented fully. Conflict between the presidency and parliament could delay reform, budgets and investment decisions.

Germany

German equities were more resilient than French shares, although the economic environment remained challenging. The DAX benefited from multinational industrial, technology and financial companies with substantial revenue generated outside Germany.

Manufacturing activity remained weak, particularly within chemicals, machinery and traditional automotive production. High energy costs and subdued Chinese demand continued to affect industrial competitiveness.

Semiconductor-equipment and software businesses benefited from the global technology rally. SAP remained supported by cloud growth and increasing integration of artificial intelligence into enterprise software.

Defence companies remained strong as European governments increased expenditure. Rheinmetall and related suppliers benefited from expanding order books, although valuations had risen substantially.

Automobile manufacturers faced pressure from slower electric-vehicle demand, competition from Chinese producers and substantial investment requirements. Potential European tariffs offered some protection but risked retaliation and higher supply-chain costs.

European Technology

European technology shares benefited from strong global semiconductor demand. ASML remained one of the region's most important companies because of its dominant position in advanced lithography equipment.

Demand for increasingly sophisticated chips supported the company's long-term outlook. However, export restrictions affecting sales to China created uncertainty and reflected the strategic importance of semiconductor equipment.

Other European semiconductor companies benefited from automotive, industrial and power-management demand, although these markets were less immediately exposed to generative AI than advanced data-centre processors.

European Financials

European banks had performed strongly during the first part of 2024 but experienced greater dispersion during June. French institutions weakened sharply, while banks in other countries were more resilient.

Elevated interest rates had supported net interest income, and asset quality remained generally stable. The beginning of the ECB easing cycle raised questions about whether profitability had reached a peak.

Lower rates could reduce lending margins but also support economic activity, loan demand and borrower creditworthiness. The net effect would differ according to each institution's funding structure, geographic exposure and fee-generating businesses.

Capital returns remained attractive. Many banks continued increasing dividends and conducting share repurchases after rebuilding balance sheets following the eurozone debt crisis.

European Industrials

Industrial companies received support from defence spending, infrastructure investment, electrification and automation. Strong international businesses were less dependent upon the region's subdued domestic economy.

Engineering companies connected to electricity networks, data centres and renewable-energy infrastructure benefited from substantial long-term investment requirements.

Traditional manufacturing remained constrained by weak global goods demand and competition from lower-cost producers. Companies continued restructuring operations and investing in automation to protect margins.

Luxury Goods

European luxury-goods companies experienced mixed to weak performance. Demand remained strong among the wealthiest global consumers, but aspirational customers became more cautious.

China remained a key uncertainty. International travel and tourism supported purchases outside mainland China, while domestic consumer confidence remained affected by property weakness.

Companies with the strongest brands, limited production and direct control over distribution were better positioned to maintain exclusivity and pricing power. Businesses exposed to more fashion-sensitive or entry-level products faced greater volatility.

European Energy

Energy shares produced mixed returns as oil prices recovered from earlier weakness but remained below the year's highest levels. Integrated producers continued generating substantial cash flow and returning capital to shareholders.

European energy companies also faced policy pressure concerning emissions, windfall taxation and investment in renewable energy. Investors assessed whether diversification spending would generate returns comparable with traditional oil and gas operations.

European Utilities

Utilities were sensitive to both interest rates and political developments. Lower ECB rates were supportive because the sector required substantial capital and was often valued partly according to dividend income.

Companies investing in electricity networks and renewable generation benefited from structural demand. However, regulatory changes and political intervention in energy pricing remained important risks.

French utility and infrastructure businesses experienced additional pressure because of election uncertainty and the possibility of changes to regulated prices, concessions or public investment.

Southern Europe

Spanish and Italian equities were comparatively resilient. Their banking sectors benefited from improved profitability, while tourism supported economic growth.

Italian government-bond spreads remained contained relative to the widening experienced in France. Investors viewed Italy's current political environment as comparatively stable despite its high public debt.

Spain continued to benefit from tourism, services and investment linked to European recovery funds. Domestic banks and infrastructure companies attracted interest, although political fragmentation remained a longer-term consideration.

Nordic Markets

Nordic equities produced mixed performance. Healthcare and industrial companies remained globally competitive, while property businesses continued adjusting to higher financing costs.

Sweden's earlier interest-rate reduction supported expectations of gradual relief for highly indebted households and property companies. However, refinancing remained challenging for weaker commercial-property owners.

Danish equities continued to benefit from the exceptional growth of pharmaceutical businesses exposed to diabetes and obesity treatment.

European Small and Mid-Capitalisation Companies

European smaller companies remained sensitive to economic growth and financing costs. The ECB's first rate cut offered potential support, but political uncertainty limited the immediate benefit.

Small and mid-cap businesses generally possessed greater exposure to domestic European demand than the largest multinational indices. A sustained regional recovery and additional monetary easing could therefore improve their relative performance.

Valuations remained attractive in comparison with large US companies, but liquidity and earnings growth were less reliable. Active selection remained important because balance-sheet quality varied considerably.

European Valuations

European equities continued to trade at a substantial valuation discount to the United States. This reflected weaker economic growth, lower technology exposure, political fragmentation and a larger weighting towards financials, industrials and traditional energy.

The discount created potential opportunity where companies generated international revenue, possessed strong competitive positions and returned capital to shareholders.

However, low valuations alone did not guarantee superior returns. Structural reform, productivity improvement and stronger domestic investment were required to improve the region's long-term growth outlook.

United Kingdom

UK equities declined modestly during June after reaching record highs during the previous two months. The FTSE 100 lost approximately 1%, while the more domestically oriented FTSE 250 produced a comparatively resilient result.

The FTSE 100 was affected by weaker performance among energy and defensive multinational companies. Its limited exposure to the largest global technology businesses also caused it to lag the AI-led advance in the United States.

Sterling remained relatively firm against several currencies, reducing the translated value of overseas earnings for multinational companies. A substantial proportion of FTSE 100 revenue was generated outside the United Kingdom.

The domestic political environment remained calm despite the approaching 4 July general election. Markets expected a change of government but viewed the principal parties' economic platforms as relatively moderate.

Both major parties emphasised fiscal discipline, reducing concern about a substantial immediate increase in government borrowing. The contrast with political uncertainty in France contributed to the stability of UK government bonds and sterling.

UK Financials

UK banks produced mixed performance. The domestic economy improved, unemployment remained low and severe credit deterioration had not emerged.

Higher interest rates continued to support lending income but increased competition for deposits and created pressure for mortgage borrowers. Banks prepared for eventual Bank of England easing, which could reduce margins but support loan demand.

Capital positions remained strong, allowing dividends and share repurchases. Investors nevertheless monitored commercial-property exposure, consumer arrears and the refinancing of fixed-rate mortgages.

Insurance and asset-management companies benefited from higher investment yields and improving market values. However, fee pressure and the shift towards passive products remained important structural challenges for traditional investment managers.

UK Energy

Energy companies weighed upon the FTSE 100 as oil prices remained below their April highs. Shell and BP continued generating substantial cash flow and returning capital to shareholders.

Investors remained divided regarding long-term strategy. Some favoured increased oil and gas production and disciplined spending, while others continued to emphasise the need to invest in lower-carbon energy.

The approaching election created uncertainty regarding North Sea taxation and future exploration policy. Changes to investment allowances or windfall taxes could affect the economics of domestic production.

UK Mining

Mining shares produced mixed returns as copper retreated from its May record and uncertainty surrounding Chinese demand remained significant.

The long-term case for copper and selected transition metals remained constructive because of electricity networks, renewable energy and data-centre investment. However, short-term prices had moved ahead of immediate physical demand during parts of the second quarter.

Iron-ore producers remained sensitive to Chinese property and steel production. Weak residential construction offset government infrastructure support.

UK Consumer Companies

Consumer businesses benefited from improving real household incomes as inflation returned to the Bank of England's 2% target. Wage growth remained positive and energy prices had declined significantly from their peak.

Retail performance nevertheless varied according to customer profile. Value-focused supermarkets and discount retailers remained relatively resilient, while discretionary businesses faced more selective spending.

Mortgage costs continued to place pressure on households refinancing older fixed-rate agreements. The effect was gradual because loans repriced at different times rather than simultaneously.

UK Housebuilders and Property

Housebuilders remained sensitive to mortgage rates and expectations for Bank of England policy. Inflation's return to target increased confidence that borrowing costs could decline later in the year.

Housing demand remained constrained by affordability, planning delays and limited mortgage capacity. However, long-term undersupply continued to support the sector's structural investment case.

Listed property companies produced mixed returns. Logistics, student accommodation and selected residential assets remained stronger than lower-quality offices and shopping centres.

UK Industrials and Defence

Industrial companies remained supported by international demand and structural investment themes. Aerospace and defence businesses benefited from large order books and increasing government expenditure.

BAE Systems and related suppliers remained important beneficiaries of the multi-year increase in defence budgets. Valuations had risen, increasing the importance of contract execution and production growth.

Engineering groups connected to energy, infrastructure and automation continued to attract investor interest. Their international revenue reduced dependence upon the modest UK growth outlook.

UK Healthcare and Pharmaceuticals

Large pharmaceutical businesses provided defensive earnings but produced mixed market performance. Product pipelines, clinical data and currency movements remained more important than the domestic UK economy.

AstraZeneca continued investing in oncology, rare diseases and international manufacturing. GSK remained focused on vaccines, infectious diseases and specialty medicines.

The sector's international revenue and relatively predictable demand provided diversification, although patent expirations, litigation and research outcomes created company-specific risk.

FTSE 250 and Domestic Equities

The FTSE 250 performed more resiliently than the FTSE 100 during parts of June. Investors responded to the recovery in UK economic activity and the prospect of eventual interest-rate reductions.

Mid-cap companies offered greater exposure to domestic housing, consumer spending, financial services and business investment. They could therefore benefit more directly from an improvement in the UK economy.

Valuations remained below long-term averages and substantially below those of large US companies. However, earnings had been affected by weak economic growth, and many businesses carried greater debt than the largest multinational groups.

UK Takeover Activity

Merger-and-acquisition interest remained an important theme. International companies and private-equity sponsors continued examining UK-listed businesses whose valuations appeared low relative to private-market transactions or overseas competitors.

Takeover proposals highlighted the potential value within the market but also raised concern regarding the reduction in the number of companies listed in London.

Boards faced the challenge of deciding whether acquisition premiums represented fair value or merely reflected the unusually depressed starting prices of UK shares.

UK Market Valuation

The UK remained one of the least expensive major developed equity markets. The FTSE 100 offered an attractive dividend yield and exposure to global financials, commodities, healthcare and consumer staples.

The market's low technology weighting limited participation in the AI-led global rally. However, it also reduced exposure to the highest valuations and provided diversification for internationally concentrated portfolios.

The FTSE 250 offered greater potential sensitivity to lower interest rates and improving domestic growth. Its smaller companies also carried greater operational and financing risk.

Market Breadth and Concentration

June reinforced the contrast between strong headline indices and weaker performance across the average listed company. US mega-cap technology continued to produce a disproportionate share of global returns.

This concentration reflected genuine earnings growth and the strategic importance of artificial intelligence. The largest businesses possessed strong balance sheets, extensive distribution and the ability to finance exceptional capital expenditure.

Nevertheless, narrow leadership created portfolio risk. Index investors became increasingly exposed to a small number of companies and a single broad investment theme.

European and UK markets offered greater sector diversification and lower valuations but lacked the same rate of earnings growth. Investors therefore needed to balance price, quality and structural growth rather than assuming that either expensive US leaders or inexpensive European shares would automatically outperform.

Indicative June Performance

Market	Approximate June Movement	Principal Influence
Global Equities	+2.6%	US technology and artificial-intelligence leadership
S&P 500	+3.5%	Mega-cap technology and semiconductor strength
Nasdaq Composite	Approximately +6.0%	Artificial intelligence, cloud computing and semiconductors
Dow Jones Industrial Average	Modestly positive	Limited technology exposure restricted gains
Russell 2000	Weak to modestly negative	High financing costs and narrow market leadership
STOXX Europe 600	Broadly flat	ECB rate cut offset by French political uncertainty
France CAC 40	Sharply negative	Snap election and fiscal-policy concern
Germany DAX	Mixed to modestly negative	Weak manufacturing offset by multinational earnings
FTSE 100	Approximately -1.0%	Energy weakness and limited technology exposure
FTSE 250	Comparatively resilient	Improving UK economy and rate-cut expectations

Equity-Market Considerations

• Artificial intelligence continued to dominate global equity performance.
• Nvidia briefly became the world's largest publicly listed company.
• US market-capitalisation-weighted indices significantly outperformed equal-weighted benchmarks.
• Small-capitalisation companies remained constrained by high borrowing costs.
• The ECB's first rate cut provided support to European domestic sectors.
• French political uncertainty outweighed the positive monetary backdrop.
• UK markets remained stable ahead of the general election but lagged US technology shares.
• European and UK valuations remained substantially below comparable US valuations.
• Lower valuations offered potential opportunity but reflected weaker structural growth.
• Portfolio concentration became an increasingly important risk for global investors.

Fixed Income Markets

Global fixed-income markets generally advanced during June 2024 as moderating inflation supported government bonds. However, performance varied substantially by country. US Treasury yields declined, while French government bonds weakened after the announcement of a snap parliamentary election increased concern about fiscal policy and political stability.

United States

The Federal Reserve maintained the federal funds target range at 5.25%–5.50%. Updated projections showed that the median policymaker expected only one quarter-point reduction during 2024, compared with three reductions projected in March.

The cautious outlook reflected persistent inflation during the first quarter and continued labour-market resilience. Nevertheless, softer consumer-price data released on the morning of the Federal Reserve decision supported Treasury prices and preserved expectations that easing could begin before year-end.

The benchmark 10-year Treasury yield declined during June, ending close to 4.4%. Shorter-dated yields also moved lower, although they remained elevated because the timing of the first policy reduction was uncertain.

Investors continued to balance two competing possibilities. A gradual economic slowdown and moderating inflation would support bonds, while persistent services inflation and large government borrowing requirements could keep yields elevated.

Eurozone Government Bonds

The European Central Bank reduced its deposit rate from 4.00% to 3.75%, delivering its first reduction since 2019. The main refinancing rate fell to 4.25%, while the marginal lending rate declined to 4.50%.

The move had been widely anticipated. More important for markets was the ECB's refusal to commit to a rapid sequence of further cuts. Policymakers continued to focus on wages, services inflation and corporate profit margins.

German government bonds benefited from moderating inflation and safe-haven demand. Political uncertainty in France caused investors to favour German Bunds over French debt.

French Government Bonds

The spread between French and German 10-year government-bond yields widened sharply following President Emmanuel Macron's decision to dissolve the National Assembly. Investors considered whether a new government might pursue policies that increased public borrowing or weakened France's commitment to European fiscal rules.

France already carried a substantial budget deficit and high public debt. Proposals involving tax reductions, increased public spending or reversal of pension reforms therefore attracted particular scrutiny.

The widening did not reach the extreme levels experienced during the eurozone sovereign-debt crisis, but it represented a significant repricing of political and fiscal risk within one of the region's largest economies.

Italy and Southern Europe

Italian and Spanish government bonds remained comparatively resilient. Italy's debt burden was higher than France's, but its current political environment was perceived as relatively stable and the government had adopted a more cooperative relationship with European institutions.

Southern European economies also benefited from tourism, improving employment and European recovery funding. Nevertheless, a prolonged period of French instability could have affected risk premiums throughout the eurozone.

United Kingdom

The Bank of England held Bank Rate at 5.25%, with seven members supporting no change and two preferring an immediate reduction. Headline inflation had returned to the 2% target, but services inflation and wages remained stronger than policymakers considered compatible with sustained price stability.

UK gilt yields declined modestly during parts of June as investors anticipated that the Bank could begin easing after the general election. Domestic financial markets remained relatively calm because the leading political parties continued to emphasise fiscal discipline.

Canada

The Bank of Canada reduced its policy rate by 25 basis points to 4.75%, becoming the first G7 central bank to begin easing during the cycle. Inflation had moderated and economic growth remained subdued, allowing policymakers to reduce the degree of monetary restriction.

The decision demonstrated that global central banks would not necessarily move together. Domestic inflation, housing markets, employment and currency conditions would determine the pace of easing in each jurisdiction.

Japan

Japanese government-bond yields remained elevated relative to their recent history as investors anticipated a gradual reduction in Bank of Japan bond purchases. The central bank maintained its short-term policy rate near zero but indicated that it would provide a detailed plan for reducing purchases at a later meeting.

Higher Japanese yields offered limited support to the yen because the interest-rate differential with the United States remained substantial.

Investment-Grade Credit

Investment-grade corporate bonds produced positive returns as government yields declined and credit spreads remained contained. Strong corporate earnings, healthy cash balances and continued economic growth supported confidence in higher-quality issuers.

Companies continued to issue debt actively, seeking to refinance maturities while investor demand remained strong. The absolute cost of borrowing was substantially higher than during the period before 2022, but well-capitalised businesses retained reliable market access.

High-Yield Credit

High-yield bonds remained supported by strong equity markets and low near-term recession expectations. Credit spreads remained relatively tight, reducing the additional compensation investors received for accepting default risk.

Selection remained important. Businesses with recurring revenue, moderate leverage and the ability to generate cash were better placed than companies dependent upon repeated refinancing or rapid reductions in interest rates.

Private Credit

Private credit remained active across leveraged buyouts, refinancings and corporate growth transactions. Direct lenders offered speed, confidentiality and flexible documentation, while investors continued to receive attractive floating-rate income.

Competition increased as banks and syndicated loan markets returned to stronger transactions. This placed downward pressure on spreads and encouraged more borrower-friendly terms.

Existing borrowers remained exposed to high cash-interest costs. Amendments, maturity extensions and payment-in-kind interest were increasingly used to preserve liquidity, although these measures could increase the eventual debt burden.

Fixed-Income Considerations

• The ECB and Bank of Canada began reducing policy rates.
• The Federal Reserve projected only one reduction during 2024.
• US Treasury yields declined as inflation moderated.
• French sovereign spreads widened following the snap-election announcement.
• Credit spreads remained tight despite elevated underlying yields.
• Private-credit income remained attractive, but competition and borrower stress required careful underwriting.

Foreign Exchange

Currency markets were influenced by divergent central-bank policies, political risk and changing interest-rate expectations. The US dollar remained firm against several major currencies, while the Japanese yen weakened to levels that renewed speculation about official intervention.

US Dollar

The dollar remained supported by the relatively high level of US interest rates and the strength of the American economy. Although softer inflation encouraged expectations of eventual Federal Reserve easing, policymakers continued to project a slower reduction in rates than many international counterparts.

Safe-haven demand also supported the currency during periods of European political uncertainty. The dollar remained an important destination for investors seeking liquidity and high-quality short-term income.

Euro

The euro weakened as the ECB began reducing rates and political uncertainty increased in France. The prospect of a wider interest-rate differential with the United States reduced the relative attractiveness of euro-denominated assets.

The French election introduced an additional risk premium. Investors considered whether fiscal expansion or institutional conflict could affect confidence in the wider monetary union.

Sterling

Sterling remained comparatively stable ahead of the UK general election. Markets anticipated a change of government but did not expect an immediate departure from established fiscal or monetary policy.

Persistent services inflation reduced expectations of an early Bank of England rate cut, supporting sterling through the interest-rate channel.

Japanese Yen

The yen weakened beyond ¥160 per US dollar near the end of June. The currency remained affected by the wide gap between Japanese and US interest rates, which encouraged investors to borrow in yen and purchase higher-yielding assets elsewhere.

Japanese authorities warned against excessive and disorderly currency movements. Previous intervention had produced temporary appreciation, but a lasting recovery was likely to require either lower US rates or more substantial Bank of Japan tightening.

Chinese Renminbi

The renminbi remained under pressure from weaker domestic demand, lower Chinese interest rates and trade tensions. Authorities continued to manage the currency carefully through official reference rates and activity by state-owned banks.

A weaker currency could support exporters but also risked capital outflows and additional criticism from trading partners.

Emerging-Market Currencies

Emerging-market currencies produced mixed returns. Lower global bond yields provided some relief, but a firm dollar remained challenging for countries with substantial external debt or current-account deficits.

Currencies supported by high real interest rates, credible monetary policy and strong commodity exports generally remained more resilient.

Commodities

Commodity markets delivered mixed performance during June. Oil recovered after weakness in May, while copper retreated from its record high. Gold remained elevated but traded within a narrower range as investors balanced central-bank demand against persistent US interest rates.

Oil and Energy

Crude-oil prices advanced during June. Brent returned towards the mid-$80 range, supported by seasonal demand, declining US inventories and expectations that OPEC+ would continue managing supply carefully.

OPEC+ confirmed the extension of several production restrictions, while outlining a potential gradual return of voluntary cuts from late 2024. Markets initially interpreted the plan as creating a risk of additional supply, but officials emphasised that the schedule could be adjusted according to conditions.

Geopolitical risks remained relevant. Conflict in the Middle East, attacks affecting Red Sea shipping and the war in Ukraine continued to create uncertainty around energy production and transport.

European natural-gas prices remained well below crisis-era peaks, although supply interruptions and competition for liquefied natural gas produced periodic volatility.

Gold

Gold remained close to historically high levels. Central-bank purchases, geopolitical uncertainty and demand from Asian investors continued to provide support.

The metal faced resistance from high US interest rates and a firm dollar. Investors increasingly focused on whether the Federal Reserve would begin easing during the second half of the year.

Silver

Silver retreated from the highs reached during May but remained supported by industrial use in solar panels, electronics and electricity infrastructure. Its smaller market and dual role as both a precious and industrial metal produced greater volatility than gold.

Copper

Copper declined from May's record level as speculative positioning eased and immediate physical demand failed to match the most optimistic expectations.

The long-term investment case remained supported by electricity-grid expansion, renewable energy, electric vehicles and data centres. However, high prices reduced purchases by some industrial users and encouraged inventory release.

Iron Ore and Steel

Iron ore remained sensitive to Chinese property conditions. Government support and infrastructure investment provided some demand, but residential construction continued to represent a major source of weakness.

Agricultural Commodities

Agricultural markets remained affected by weather and regional supply disruptions. Cocoa continued to trade at historically elevated levels following poor West African harvests, while coffee and wheat remained volatile.

Commodity Overview

Commodity	June Direction	Principal Influence
Crude Oil	Higher	Seasonal demand and OPEC+ supply management
Gold	Broadly stable	Central-bank buying offset by high US rates
Silver	Lower after May's rally	Profit-taking and industrial-demand uncertainty
Copper	Lower	Reduced speculation and softer immediate demand
Iron Ore	Volatile	Chinese policy support versus property weakness

Digital Assets

Digital assets weakened during June as enthusiasm surrounding exchange-traded funds was offset by reduced market liquidity, profit-taking and uncertainty regarding monetary policy.

Bitcoin

Bitcoin declined during the month and moved below the highs reached during March. Spot Bitcoin ETF flows became less consistently supportive, while miners continued adjusting to the reduction in block rewards following April's halving.

The transfer of Bitcoin by governments and the prospect of distributions associated with failed trading platforms also created concern about additional market supply.

Long-term institutional participation continued to expand, but the month demonstrated that regulated access did not eliminate volatility or liquidity risk.

Bitcoin Mining

Mining companies continued adapting to the block reward reduction from 6.25 to 3.125 Bitcoin. Efficient operators focused on low-cost electricity, modern equipment and greater scale.

Some miners explored using their electricity access and data-centre infrastructure for artificial-intelligence and high-performance-computing workloads. These activities offered diversification but required different equipment and customer capabilities.

Ethereum

Ethereum remained supported by expectations that spot Ether ETFs would launch in the United States after exchanges received regulatory approval for the necessary rule changes in May.

Fund issuers continued working through the remaining registration process. Proposed products generally excluded staking, reducing regulatory complexity but also preventing investors from receiving network rewards through the funds.

Regulation

The European Union's Markets in Crypto-Assets framework began applying its stablecoin provisions at the end of June. Issuers and service providers prepared for requirements covering reserves, authorisation, governance and consumer protection.

Regulation remained fragmented internationally. Digital-asset businesses continued to face different approaches to token classification, custody, staking and anti-money-laundering controls.

Digital-Asset Risks

• ETF demand could vary significantly between trading periods.
• Miner profitability remained under pressure after the halving.
• Government or creditor distributions could increase market supply.
• Spot Ether funds had not yet begun trading.
• Leverage and limited liquidity continued to amplify price movements.

Private Equity

Private-equity activity continued its gradual recovery during June. Financing markets remained open for high-quality borrowers, while stronger public-equity valuations improved confidence in potential exits. Nevertheless, transaction volumes and investor distributions remained below the levels required for a complete industry recovery.

Deal Activity

Sponsors remained active within software, healthcare, financial services, infrastructure and specialised industrial businesses. Mid-market transactions continued to be more achievable than the largest leveraged buyouts because they required smaller financing packages.

Corporate carve-outs attracted interest as large companies reviewed portfolios and sold non-core operations. These transactions could offer attractive entry valuations but required careful separation of technology, personnel and supplier relationships.

Financing Conditions

Competition between banks, syndicated loan markets and private-credit funds improved financing options for stronger companies. Borrowers refinanced existing debt, reduced spreads and extended maturities.

Base rates remained high despite the beginning of easing in Europe and Canada. Sponsors therefore continued using more equity and lower leverage than during the period of near-zero rates.

Valuations

Premium assets with recurring revenue, strong cash conversion and clear structural growth continued to command high valuations. Artificial-intelligence infrastructure, cybersecurity, healthcare services and data-related businesses remained particularly attractive.

Buyers remained cautious towards companies with customer concentration, weak margins or substantial refinancing requirements. Investment cases increasingly relied upon operating improvements rather than multiple expansion.

Exits

Generating distributions remained a priority. Improving public markets supported selected IPO candidates, but the new-issue market remained selective and sensitive to pricing.

Trade sales, secondary buyouts, minority disposals and continuation vehicles remained important exit routes. Sponsors increasingly prepared multiple alternatives rather than relying upon a single transaction.

Fundraising

Fundraising remained concentrated among large, established and specialist managers. Limited partners continued to face reduced distributions from older funds and consequently had less capital available for new commitments.

Secondaries, infrastructure and private credit attracted significant interest because they offered income, diversification or shorter expected holding periods.

Secondaries

Secondary-market activity remained strong as investors sought liquidity and portfolio rebalancing. Demand was greatest for mature funds containing high-quality assets with identifiable exit prospects.

General-partner-led continuation transactions allowed managers to retain selected companies while offering existing investors an opportunity to sell. Independent valuation and management of conflicts remained essential.

Operational Value Creation

Private-equity managers continued to prioritise pricing, procurement, working capital, digitalisation and management improvement. Artificial intelligence was incorporated into portfolio-company plans where it offered measurable productivity or revenue benefits.

CE Global Private Equity Observations

• Deal conditions improved but remained selective.
• Mid-market transactions continued to offer greater financing flexibility.
• Operational improvement remained more dependable than leverage-driven returns.
• Exits and investor distributions were essential to improving fundraising.
• Secondaries and continuation vehicles remained important liquidity tools.
• Private-credit competition required continued underwriting discipline.

Artificial Intelligence & Technology

Artificial intelligence remained the dominant technology investment theme during June. Nvidia's temporary rise to become the world's most valuable listed company demonstrated the market's confidence in rapid growth in advanced computing.

Semiconductors

Demand remained strong for graphics processors, high-bandwidth memory, advanced networking and semiconductor-manufacturing equipment. Cloud providers continued investing heavily to secure capacity for training and operating large AI models.

The pace of product development accelerated. Customers faced the challenge of purchasing infrastructure while knowing that more powerful processors would become available within relatively short periods.

Custom Chips

Large technology companies continued developing proprietary processors optimised for particular workloads. Custom chips could lower operating costs and reduce dependence upon external suppliers, although they were unlikely to eliminate demand for leading general-purpose accelerators in the near term.

Cloud Computing

Cloud providers benefited from increased demand for computing, storage and data-management services. Artificial intelligence could strengthen customer relationships but required substantial expenditure on data centres and power.

Investors increasingly assessed the return on this investment. Providers needed to demonstrate that AI increased revenue, customer retention or productivity sufficiently to justify capital expenditure.

Enterprise Adoption

Companies expanded experiments involving software development, customer service, document analysis, marketing and internal research. Adoption remained gradual because organisations needed to address reliability, confidential data and integration with existing systems.

Data Centres and Electricity

Access to electricity remained one of the most important constraints on AI growth. Data-centre developers sought sites with available grid connections, reliable generation and sufficient cooling capacity.

Demand increased for transformers, switchgear, backup generation, liquid cooling and network equipment. The AI investment cycle therefore extended well beyond software and semiconductors.

Consumer Technology

Apple's introduction of Apple Intelligence increased expectations of an AI-driven device-upgrade cycle. On-device processing offered potential advantages in privacy, speed and operating cost.

The commercial impact depended upon whether consumers considered the new features sufficiently useful to justify replacing existing devices.

Technology Risks

• Valuations assumed sustained exceptional growth.
• Capital expenditure could exceed near-term AI revenue.
• Rapid product cycles increased obsolescence risk.
• Power and grid constraints could delay infrastructure development.
• Copyright, privacy and competition issues remained unresolved.
• Enterprise adoption could proceed more slowly than anticipated.

Sector Spotlight

Cybersecurity and Digital Resilience

June's sector spotlight examines cybersecurity and digital resilience. The expansion of cloud computing, artificial intelligence and connected infrastructure increased the number and complexity of systems requiring protection.

Structural Demand

Cybersecurity spending was increasingly treated as essential rather than discretionary. Businesses faced financial loss, operational disruption, regulatory penalties and reputational damage if critical systems were compromised.

Remote working, cloud adoption and third-party software expanded the number of potential points of entry. Traditional network boundaries became less relevant as employees and systems accessed information from multiple locations.

Artificial Intelligence

Artificial intelligence strengthened defensive capabilities by analysing large volumes of activity and identifying unusual patterns. It also improved the ability of attackers to automate phishing, impersonation and malicious-code development.

Generative AI enabled convincing fraudulent messages, voice recordings and synthetic video. Organisations needed stronger identity verification and payment controls rather than relying solely upon visual or verbal recognition.

Identity and Access Management

Identity became a central component of security. Companies invested in multi-factor authentication, privileged-access management and systems capable of detecting unusual user behaviour.

Zero-trust architectures assumed that no user or device should be trusted automatically. Access was granted according to identity, device condition, location and the sensitivity of requested information.

Cloud Security

Cloud adoption created demand for tools capable of monitoring data, applications and infrastructure across multiple providers. Misconfiguration remained a common source of security incidents.

Businesses increasingly preferred integrated platforms capable of consolidating alerts and reducing the number of separate security tools managed by internal teams.

Critical Infrastructure

Energy, water, transport, communications and financial systems faced particular risk because disruption could affect entire communities. Governments increased requirements for incident reporting and operational resilience.

Private-Market Opportunities

• Identity and access management
• Cloud-security platforms
• Managed security services
• Threat intelligence
• Data-loss prevention
• Payment and fraud verification
• Critical-infrastructure protection
• Security training and compliance software

Investment Risks

The sector remained highly competitive and experienced rapid technological change. Smaller providers risked being displaced by larger integrated platforms or by features incorporated directly into cloud services.

Customer acquisition costs could be high, while security businesses needed to maintain trust and respond rapidly when their own products were affected by vulnerabilities.

Investment Perspective

Cybersecurity remained a durable growth market because digital dependence and attack sophistication continued to increase. The strongest opportunities were likely to involve recurring revenue, high customer retention and technology integrated deeply into critical workflows.

Regulatory Update

Regulatory activity during June focused on artificial intelligence, digital assets, competition, operational resilience and fiscal governance.

Artificial Intelligence

Companies continued preparing for the European Union's risk-based artificial-intelligence regime. Businesses began identifying AI systems, classifying potential risks and assigning responsibility for governance.

High-impact applications involving employment, credit, healthcare and critical infrastructure required particularly careful testing, documentation and human oversight.

Digital Assets

The stablecoin provisions of the European Union's Markets in Crypto-Assets framework began applying at the end of June. Issuers faced requirements concerning authorisation, governance, reserves and redemption.

US asset managers continued seeking final approval for spot Ether ETF registration statements. The regulatory position surrounding staking and many alternative tokens remained uncertain.

Technology Competition

Competition authorities continued examining relationships between major cloud providers and AI developers. Access to computing power, data and distribution created concern that a small number of platforms could control the emerging market.

Private Markets

Private-fund managers faced increasing scrutiny concerning valuations, fees, preferential terms and conflicts of interest. Continuation vehicles required transparent processes because managers could influence both sides of a transaction.

Operational Resilience

Financial businesses strengthened controls governing cybersecurity, third-party technology and incident response. Regulators increasingly expected firms to understand their dependence upon cloud and data providers.

European Fiscal Policy

France's budget deficit and the policy proposals made during the election campaign increased attention on European fiscal rules. Investors assessed whether political commitments could conflict with the requirement to reduce excessive deficits.

Compliance Priorities

• Maintain an inventory of AI systems and responsible owners.
• Document testing and human oversight of automated decisions.
• Assess digital-asset activities under developing regional rules.
• Review technology-provider concentration and contingency planning.
• Apply consistent valuation methods to illiquid investments.
• Disclose continuation-vehicle conflicts clearly.
• Strengthen identity and payment verification against AI-enabled fraud.

Looking Ahead

Markets entered July with strong US equity momentum, declining inflation and the beginning of monetary easing outside the United States. Political uncertainty in France, narrow equity-market leadership and persistent geopolitical risk remained important challenges.

Federal Reserve

Investors would continue examining inflation, employment and consumer spending for evidence that the Federal Reserve could begin reducing rates. A September move remained possible but required further confidence that inflation was returning sustainably to target.

European Central Bank

Following its June reduction, the ECB was expected to proceed cautiously. Markets would focus on whether wage growth and services inflation permitted another cut during September.

Bank of England

The Bank of England's August meeting would become increasingly important after the UK general election. Headline inflation had returned to target, but domestic services and wage pressure remained elevated.

French Elections

The second round of the French parliamentary election would determine the balance of power within the National Assembly. Investors would assess the likely consequences for taxation, spending, pension reform and relations with European institutions.

Corporate Earnings

Second-quarter earnings would test whether record US equity valuations remained justified. Technology companies needed to demonstrate continued AI demand and credible returns on capital expenditure.

Investors would also assess whether earnings growth was broadening beyond the largest technology companies.

Market Concentration

The dominance of a limited number of mega-capitalisation companies remained a central portfolio issue. Strong fundamentals supported the leaders, but high index concentration increased vulnerability to company-specific disappointments.

China

Investors would monitor property sales, consumer confidence and additional support measures. Trade tensions involving electric vehicles, batteries and renewable-energy equipment would remain important.

Japan

The Bank of Japan was expected to provide greater detail regarding the future reduction of government-bond purchases. Yen weakness could increase pressure for further policy normalisation.

Commodities

Oil markets would assess whether summer demand and OPEC+ discipline could offset increasing non-OPEC supply. Copper would remain sensitive to Chinese demand and evidence of physical-market tightness.

Digital Assets

The anticipated launch of spot Ether ETFs would provide an important test of institutional demand beyond Bitcoin. Investors would also monitor Bitcoin ETF flows and miner consolidation.

Private Markets

Private-equity activity was expected to improve gradually, supported by accessible credit and stronger public valuations. Generating exits and distributions would remain essential to restoring fundraising conditions.

Key Indicators to Monitor

Area	Indicator or Event	Potential Significance
United States	Inflation, payrolls and retail spending	Timing of the first Federal Reserve cut
France	Parliamentary election result	Fiscal policy and European risk premiums
United Kingdom	Election outcome and services inflation	Fiscal outlook and Bank of England policy
Corporate Earnings	Second-quarter results	Sustainability of record equity valuations
Japan	Bond-purchase policy and yen movements	Pace of monetary normalisation
China	Property activity and policy support	Asian equities and commodity demand
Digital Assets	Potential spot Ether ETF launches	Institutional participation and liquidity
Private Markets	Exits, distributions and refinancings	Fundraising and deal activity

CE Global Private Equity Perspective

June demonstrated that the global monetary cycle had begun to turn, but not uniformly. The ECB and Bank of Canada were able to reduce rates, while the Federal Reserve and Bank of England remained cautious.

The continued strength of US equities reflected exceptional earnings and investment associated with artificial intelligence. However, narrow leadership and elevated valuations reduced the margin for disappointment.

Political developments in France illustrated how fiscal credibility could influence markets even when inflation and interest rates were becoming more supportive. Sovereign risk remained relevant within highly indebted developed economies.

Within private markets, financing conditions improved but remained more expensive than during the previous decade. Moderate leverage, reliable cash flow and operational value creation continued to offer the strongest protection.

CE Global Private Equity believes that attractive long-term opportunities remain across digital infrastructure, cybersecurity, healthcare, electricity networks and specialised industrial services. Investment discipline remains essential where structural enthusiasm has already produced substantial valuation increases.

Portfolios should retain diversification and sufficient liquidity to respond to political, economic and market dislocations. The strongest long-term results are likely to come from combining secular growth with prudent capital structures, experienced management and realistic entry valuations.

This market review is provided for general information and discussion purposes only. It does not constitute investment, legal, tax or other professional advice, nor an offer or solicitation to purchase or sell any security, financial instrument or investment product. Market values can rise or fall, and past performance is not a reliable indicator of future results.