The concerns which weighed on markets during the first half of the year were clearly evident in June. The attempt to stabilize market trends seen in May was not followed up and was accompanied by a new bearish phase that led U.S. indexes to hit new lows. On the European front, losses of around 10% were recorded, but they still remain above the lows recorded in March. This correction is mainly attributable to the tighter monetary policies put in place by the major Central Banks to combat the continuing rise in inflation.

The slow return to normalcy after the re-emergence of the pandemic in China, the long war in Ukraine with the effect of the many sanctions imposed on Russia, and the energy crisis have accentuated the non-transitory nature of inflation. The delay in awareness on the part of the major Central Banks, which rushed to the rescue too late and too quickly, had the effect of causing economic cooling. At its June meeting, the FED announced a rate increase of 75 basis points, giving further acceleration to monetary tightening. The ECB, in its extraordinary meeting convened following the strong market movement it had after the official meeting the weeks before, gave a mandate to design a new anti-fragmentation instrument to be submitted to the Governing Council in order to ensure the uniform transmission of monetary policy and avoid excessive widening of rate differentials between euro area government bonds.

Since early 2022, major international markets have experienced significant losses. MSCI World, the index of global equities, lost 7.80 percent in June and is down 20 percent since the beginning of the year. This is the most significant decline in the first quarter since 1990 when it was established. In America we find the S&P 500 index down 7.70 percent on the month and down 20.5 percent since the beginning of the year. Worse Nasdaq technology index -8.05% in June and -28.5% since the beginning of the year. Negative trend also in Europe with Euro Stoxx index down 8.10% (-19.60% since the beginning of the year) with German DAX index -10.80% and Italian FTSE MIB index -12.30%. Since the beginning of the year the 2 indexes perform -19.50% respectively -22.10%. There is a similar situation in Switzerland where the SMI index is down 6.55% on the month and 16.58% since the beginning of the year. Not exempt from declines as well is the bond market with Bloomberg Global Aggregate Bond index marking -13% since the beginning of the year.

The broad correction of the past half year has led to less excessive valuations it will now be the wait for quarterly results, released during July, that will quantify the impact of weaker macro economic data on corporate earnings.