European equities reached record highs, supported by easing geopolitical tensions, lower oil prices and continued demand for AI-related investments.
Inflation and interest rates remained key themes, with the ECB raising rates while the Federal Reserve and Bank of England maintained a cautious, hawkish stance.
Bond markets recovered and corporate credit remained resilient, benefiting from improving sentiment, lower inflation concerns and strong investor demand.
June 2026 was a month of diverging market performance, with easing tensions in the Middle East and falling oil prices helping to support investor sentiment, while persistent inflation and cautious central bank messaging tempered optimism. European equities continued to climb, ending the quarter at record highs, while US and broader Asian markets faced more mixed conditions. Bond markets recovered as geopolitical risks subsided and inflation concerns eased, while AI-related technology stocks remained a key driver of market returns across regions.
European equities delivered another month of gains, reaching record highs as easing geopolitical tensions, lower oil prices and continued enthusiasm for AI-related investment supported markets. Inflation fell more than expected during June, although it remained above the ECB's target, prompting the central bank to deliver its first interest-rate increase since 2023. Improving business and economic sentiment further reinforced confidence in the region's outlook.
UK equities finished modestly higher but lagged many global peers amid heightened market volatility. Inflation remained stable at 2.8%, while core and services inflation edged higher, leading the Bank of England to keep interest rates unchanged. Economic growth softened, with GDP contracting slightly in April, although activity remained positive over the broader three-month period. Labour market conditions continued to weaken, while stronger retail sales and reduced political uncertainty provided some support to sentiment.
US equities underperformed global peers in June as investors grappled with rising inflation, ongoing geopolitical uncertainty and expectations that interest rates may remain higher for longer. While AI-related investment continued to provide support, market leadership broadened away from large-cap technology stocks. Economic data remained resilient, with strong employment growth, improving business activity and stronger-than-expected GDP supporting the overall outlook.
Asian equities declined during June as oil-price volatility, geopolitical tensions and concerns about global growth weighed on sentiment. Technology and semiconductor-related stocks remained the primary source of market leadership, with Taiwan and Japan among the stronger performers. However, weakness in Hong Kong and Indonesia highlighted the increasingly uneven nature of market returns across the region.
Emerging market equities moved lower as investors weighed higher oil prices, shifting expectations for US interest rates and uncertainty surrounding the Middle East. Performance diverged significantly across regions, with Taiwan outperforming on continued AI-related demand, while Hong Kong, Indonesia and much of Latin America struggled. India proved relatively resilient, supported by strong domestic demand and infrastructure investment.
Bond markets delivered positive returns in June as easing geopolitical tensions, lower oil prices and moderating inflation concerns supported investor sentiment. Central banks remained cautious, with the ECB raising rates while the Federal Reserve and Bank of England held policy steady. Corporate bonds also performed well, supported by resilient fundamentals, strong demand and record levels of issuance in Europe.
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