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There was plenty going on in June with the return of the TACO trade (Trump always chickens out) boosting investor sentiment as President Trump fudged a deal with Iran, claiming victory in the conflict whilst achieving very little. To date the tentative peace deal has held despite a few minor skirmishes, but the key point is that the Strait of Hormuz is back open for business. According to stats from Guinness Global Investors, the volume of oil passing through the Straits of Hormuz is now close to pre-crisis levels of 20 million barrels per day and the oil price fell sharply over the month. This proved timely as the the OECD had painted a gloomy picture in its global outlook that a prolonged energy crisis would lead to a “dark scenario” of depressed growth & sharply higher interest rates.

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At home, the news flow has been dominated by the resignation of Keir Starmer as Prime Minister following the decisive victory in the Makerfield by election by Andy Burnham. The momentum for Burnham to take over as leader resulted in no leadership contest and he is likely to become PM by mid-July (the third unelected UK Prime Minister in four years).  Markets have shown little reaction, with uncertainty over how his policies will change the course of the stagnant UK economy. It seems unlikely Rachel Reeves will be chancellor for much longer with Wes Streeting the preferred candidate for investors.

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April saw the UK economy contract with a 0.1% fall in GDP – not unexpected. However, May’s UK inflation was flat at 2.8%, a slight surprise bearing in mind the hike in fuel prices. The Bank of England might for once have played a blinder by not raising rates (despite markets having predicted a number of rate hikes this year). The European Central Bank did raise interest rates for the first time since 2023, albeit from a much lower level moving from 2% to 2.25%.

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In the US, the new Governor of the Federal Reserve Kevin Warsh presided over his first meeting and kept rates on hold, although appeared to show little sign of kowtowing to President Trump’s demands for lower rates. Indeed, the Fed signaled possible rate hikes by the end of the year as inflation rose to 4.2%, a three-year high and the economy showing no signs of slowing as the AI boom fuels growth and jobs data was stronger than expected with 172k jobs created in May, double the forecast.

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The big corporate news in June was the historic IPO of SpaceX which raised $75 billion and initially rocketed to a $3 trillion valuation before falling back as investors became concerned on whether the huge investment in AI infrastructure will deliver shareholder returns. The analogy between casino chips and the current craze for semiconductor chips seems pertinent with speculation in the sector pushing the Philadelphia Semiconductor index up 80% in the second quarter!

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Market Watch

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Optimism about a potential Middle East resolution supported global equities, although the MSCI World Index was broadly flat, slipping 0.07% as concerns about tech valuations saw a sell off late in the month. The S&P 500 fell 1%, while the tech-heavy NASDAQ declined 2.7% amid a sell-off in hyperscalers. The Magnificent Seven US mega-caps lost more than $2 trillion in combined value in June, with clear signs of rotation into more defensive sectors such as healthcare. There were also signs of a rotation into US smaller companies, looking to exploit the strength of the domestic economy and the benchmark Russell 2000 small cap index showed a monthly gain of 3.7%.

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Beneficiaries of a falling oil price were the biggest winners and European benchmarks bounced back in June with the MSCI Europe ex UK index up 3.9%, as falling energy prices boosting hopes for cooling inflation. Political turbulence in the UK seemed to have little effect on the major stockmarket indices with the FTSE up by 1% and the Japanese market also posted a 1% monthly gain to consolidate a strong first half to the year, with the Topix up 18% in the first half of 2026 making it the pick of developed markets.

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Bond markets showed signs of calm in June as peace (for the moment) in the Middle East reduced concerns over future rate rises. Yields were far less volatile than they had been since the conflict began. Despite the high US inflation reading, the ten-year Treasury yield was only slightly higher, ending the month at 4.47%, compared with 4.44% at the end of May. In the UK, despite political turbulence and concerns over higher borrowing under a Burnham administration, the ten-year gilt yield fell to 4.76%, down from 4.81% a month earlier.

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Commodity markets saw the biggest moves from the peace agreement in the Middle East with oil having the biggest quarterly fall in six years. A barrel of Brent crude is now back down to $72.92 having peaked at over $125 in April. Gold saw its biggest three-month fall in a decade. Gold has fallen sharply during the Middle East conflict and has not provided a haven during the Geopolitical uncertainty as the threat of higher rates impacts an asset with no yield. Earlier in 2026 gold traded at over $5500 an ounce, it finished June at $4038.

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On the currency markets the relative strength of the US economy is seeing a return to favour of the US dollar. The greenback had a good month gaining 1.6% against sterling, which itself proved relatively resilient despite the political uncertainty (the pound is a better barometer than the stockmarket over UK sentiment and it rose 0.5% against the Euro and Yen). Bitcoin is often seen as a barometer for risk and has also been on the slide and is now below $60000 ($58566 to be precise) after topping out just below $100000 earlier in the year.

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The numbers…

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Monthly performance figures 31/5/26 to 30/6/26 source FE Analytics. N.b. the fund sectors exclude money market funds, markets are in local currency, and investment trusts exclude VCTs.

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Important Information

This document is produced by Fairview Investing Ltd, an independent research consultancy in conjunction with James Scott-Hopkins. The content is for information purposes only and does not constitute financial advice. The commentary or research provided do not constitute a personal recommendation to deal. Any statements, opinions, forecasts, and figures are made by Fairview Investing (unless otherwise stated). They are considered to be reliable at the time of writing but may be subject to change.

Fairview Investing accepts no legal responsibility or liability for the content of this material. The contents of the document are not to be re-produced or circulated without the express permission of Fairview Investing Ltd. Fairview are independent investment consultants sitting on the Investment Committee of EXE Capital Management.

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