In June, the Federal Reserve raised US interest rates for the second time this year and stated their intention for two further hikes by the end of 2018. This show of confidence is supported by a raft of economic data which points to strong consistent growth in the world’s largest economy.
UK economic news was also encouraging: retail sales – a barometer for the health of the UK’s retail sector – produced far stronger figures than expected in June, suggesting that British consumers are also feeling more positive and happy to loosen the purse strings. On the continent, the European Central Bank signalled their intention to keep interest rates on hold until at least next summer.
Simmering tensions between the US and its world trade partners, concerns over the strength of Germany’s coalition government and Brexit negotiations between the UK and the EU failing to reach an agreement, all contributed to global stock markets remaining on alert throughout the month of June. The result was a 0.6% fall for European markets and a significant 2.9% fall in Emerging Markets, which typically depend heavily on the strength of global trade. The US meanwhile avoided becoming a casualty of the tensions, achieving a respectable 0.6% growth.
In corporate news, luxury car and engine maker, Rolls-Royce was a top performer in June, with the share price closing up over 20% after the firm announced plans to simplify its business.
The political uncertainty around Brexit talks and global trade frictions, all contributed to the Pound’s 0.61% fall against the Euro and 0.69% fall against the US Dollar in June, although it made a respectable gain of 1.07% against the Japanese Yen.
Investment type performance breakdown
The majority of investment types ended the month lower, with only private equity and property producing positive results: commodities -2.73%; private equity +1.30%; bond investments -0.15%; property +0.24%; and shares -0.84%.
Summary with Plan details
A positive and timely set of economic data boosting confidence in the US has not translated into strong market returns in the past month, due to global trade and political frictions making investors cautious. This has caused the value of all our investment plans – cautious to adventurous – to fall in June. While this is clearly disappointing for investors, it’s important to ignore the short-term market movements caused by these global political issues and focus on the long-term goals of your investments. Our investment team remain focused on creating growth for your plans and ready to act as opportunities or situations arise.
Figures shown are based on a medium-risk (Confident) investment Plan.
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