The remarkable comeback from the March lows gave way to some choppy financial conditions in June. Still, global equity markets edged higher during the month. The S&P 500 was stuck in a 250-point range and advanced by a relatively muted 1.8% in June. Looking abroad, European stocks outpaced their US peers for the first month since September as major European economies successfully contained the virus and fired up their engines ahead of the US – while plans to reopen in America have been halted in response to the latest spike in cases. Emerging markets led the global charge as unprecedented central bank stimulus overshadowed the threat of rising infections across some developing nations, with India and Brazil among the newest global hotspots for the coronavirus.
Fixed income markets posted positive results. While the short-end remained well-anchored amid ongoing commitments from central banks to keep interest rates low for an extended period of time, longer-term bonds traded in a narrow range. Improved investor sentiment and stronger-than-expected economic data failed to put any notable upward pressure on longer-term bond yields owing to the abundance of central bank support that has helped to absorb incoming supply and capped government yields. Meanwhile, corporate and high yield spreads narrowed as direct intervention by major central banks lent some notable support. Indeed, the Federal Reserve stepped-up in June and detailed plans to buy individual corporate bonds.
After an extended stretch of gains, the US dollar lost some ground in June as risk appetite flourished and dampened demand for the greenback. The euro climbed to a three-month high after the European Central Bank announced a bigger-than anticipated increase to its emergency bond buying program and as Germany ramped-up its fiscal support, while the Canadian dollar rose back to pre-lockdown levels alongside the sharp revival in crude prices.
Gold breached the $1800-mark for the first time since 2011 as the spike in coronavirus cases in some US states prompted a flight into the safe haven, while the massive wave of central bank stimulus also boosted the non-interest bearing metal. Copper advanced on some nascent signs of a recovery in Chinese demand, while the emergence of the pandemic across top mining regions in South America fuelled fears of a major disruption to supply. Finally, oil thrived as cash-strapped producers rapidly shuttered production and as the OPEC consortium agreed to ongoing production curbs, while some hopeful signs of a recovery in global demand helped to alleviate the massive glut in the oversupplied market.