Inside the markets | Helping you guide clients

David Aujla narration:

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Inside the markets | Helping you guide clients. David Aujla, Portfolio Manager, Multi-Asset Solutions. Data as at 30 June 2026. This video was recorded 01 July 2026. This video is for Professional Clients only and is not for consumer use.

Hello, and welcome to the June edition of Inside the Markets, a deeper look at how global markets have been navigating what remains a very eventful 2026. My name is David Orgelar, and I'm the lead portfolio manager for Invesco's Summit and Managed Multi-Asset Fund ranges and its Model Portfolio Service.

If April was about uneasy stabilisation and May about cautious optimism, then June was arguably more of a reality check. Markets were mixed, with equities delivering modest gains or small losses depending on the region, and some of the leadership that had looked very clear earlier in the year began to fray.

On the equity side, the US and Japan managed to eke out positive returns, while Europe ex-UK performed somewhat better. That resilience reflected a more balanced sector mix and less direct exposure to the areas of the market under the greatest pressure, notably Asian technology and semiconductor stocks.

By contrast, more commodity-heavy and Asian tech-dominated markets, such as Pacific ex-Japan, the UK and emerging markets, struggled. Technology and AI remained central themes. Strong earnings from large-cap US technology and AI-linked companies continued to support US benchmarks, but June brought a wobble in the broader AI trade. After a very strong run for businesses tied to data centres, chips and cloud infrastructure, investors began to question stretched valuations and became more cautious about the forward guidance provided by these companies.

Asian technology markets experienced a sharp round of profit-taking, particularly among semiconductor and hardware companies. That reversal weighed on emerging markets and Pacific ex-Japan, both of which had been major beneficiaries of the AI theme earlier in the year.

Closer to home, the UK again found itself on the back foot. A heavier exposure to energy and other commodity-related sectors, combined with a less growth-oriented sector mix, meant that UK equities did not fully participate in US-led technology strength and also felt the impact of another significant fall in oil prices. The result was only a modest positive return and continued underperformance relative to many developed market peers, although performance has been reasonably strong year to date.

On the policy front, June was an important month. In the US, the Federal Reserve delivered a hawkish hold, removing earlier language that had hinted at an easing bias. The Bank of England also left rates unchanged, with a split vote highlighting the tension between inflation moving closer to target and concerns that higher energy prices and a tight labour market could keep inflation persistent. In the euro area, the European Central Bank raised its policy rate by 25 basis points, reinforcing the message that the fight against inflation is not yet over.

Against that backdrop, fixed income delivered another modest but positive month. Global government bonds, investment-grade credit, high yield and emerging market debt all produced small gains, with relatively little differentiation between sectors. From a multi-asset perspective, income continues to do most of the work, while higher-for-longer interest rate expectations are limiting the scope for capital gains from fixed income, at least for now.

Within alternatives, the most notable moves were again in energy and gold. Oil prices fell sharply as markets priced in further progress towards a US-Iran peace framework and weaker demand expectations. After trading with a significant war premium earlier in the year, crude oil has now given back much of that spike. While this helps the inflation outlook, it has weighed heavily on energy-focused equity markets.

Gold, which had been a key beneficiary of geopolitical stress and risk aversion, also declined as safe-haven demand faded and investors remained willing to hold risk assets despite ongoing uncertainty in markets and the broader economy.

Stepping back, June reinforced three key points for us.

First, global equity leadership remains heavily concentrated in US technology and AI-linked companies. When that trade wobbles, tech-heavy regions, particularly across Asia and emerging markets, can feel the effects very quickly.

Second, the macroeconomic and policy backdrop remains finely balanced. Inflation is easing but remains above target in most major economies, and central banks are clearly not ready to declare victory, keeping higher-for-longer interest rate scenarios firmly in play.

Third, diversification continues to matter. Leadership has already rotated multiple times this year, so maintaining a genuinely diversified mix across regions, sectors, styles and asset classes remains, in our view, the most sensible way to navigate this uncertainty.

Thank you for taking the time to watch this month's review. I hope you found it useful. As ever, please do get in touch with any questions you may have, and I'll see you next month.

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important information

Data as at 30 June 2026

This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

Views and opinions are based on current market conditions and are subject to change.