June 2020 saw stock markets continue to improve, with most data showing at least a partial bounce back from recent lows. Globally, consumer spending, housing data, and industrial production have mostly turned the corner, but we still haven’t returned to business as usual, with covid-19 and political events impacting sentiment.
In the UK, data released in June showed May’s UK retail sales were stronger than expected, rebounding 10.2% month-on-month. The latest UK unemployment figures are also positive, staying at 3.9%, thanks to support from the government’s furlough scheme. However, the latest GDP figures reflect the full force of the lockdown, with underlying activity seeing the sharpest drop on record, declining 20.4% month on month.
In the US, the data tells a mixed story. Unemployment declined to 13.3% from 14.7%, with consumer and small business confidence also recovering. May’s retail sales also saw a sharp recovery, rising 17.7% month on month. However, consumer savings rates remain very high, with some retailers still closed and cautious consumers waiting to see how the covid-19 situation unfolds.
Looking at the Eurozone, data released in June showed April’s unemployment rate was slightly up from 7.1% to 7.3%, businesses are being supported by various government programs which is helping to prevent larger unemployment levels. Survey data was encouraging, indicating June’s economic activity, although still lower when compared to the previous year, is returning to a more normal rate, as much of the Eurozone started to loosen lockdown restrictions.
Markets
In June, global stock markets saw all regions continue to gain.
Asia Pacific excluding Japan was the top performing, ending the month up +8.20%, closely followed by Emerging Market stocks which saw a large increase of +7.36%. Europe also rose firmly, ending the month up +6.48%.
Looking at market indices, the UK FTSE 100 (+1.66%) and US S&P500 (+1.99%) also gained in June, although less strongly due to political and continuing concern about the impact of covid-19.
Currency
The pound’s performance was mixed during June, falling against the euro (-0.72%), and gaining against the Japanese yen (+0.56%) and the US dollar (+0.47%).
These represent small changes, given the continued Brexit uncertainty, but comes after a broad decline in May.
Investment type performance breakdown
Economic data appears to indicate, at least for now, that the worst is behind us. Lifting stock prices and central bank policy means we’re likely to see interest rates remain lower for longer, supporting the bond market. All of our investment types delivered positive returns; bonds closed up 0.19%, property 2.57%, and shares 1.97%.
Summary with Plan details
The June performance of Wealthify Plans was positive. Plans that hold more shares delivered greater returns than Plans that hold a higher proportion of bonds, reflecting the stronger global stock market performance.
Our Investment Team continue to actively monitor the financial markets and their impact on your Plan, and as always, we are ready to act in your best interests to events as they unfold.
The figures shown are based on a medium-risk (Confident) investment Plan.
Please remember the value of your investments can go down as well as up, and you could get back less than invested. Past performance is not a reliable indicator of future returns.
