June was characterised by two clearly distinct phases. During the first half of the month, the escalation of the conflict in the Middle East and tensions in the Strait of Hormuz increased pressure on energy prices and heightened the risk of a stagflationary scenario. In the second half, diplomatic progress between the United States and Iran, followed by the suspension of hostilities in the Gulf, led to a significant reduction in the geopolitical risk premium, supporting financial markets and triggering a sharp correction in oil prices.
Despite the still uncertain backdrop, global equity markets showed a strong ability to absorb both the geopolitical shock and the shift in monetary policy expectations. However, market performance remained uneven and leadership continued to be highly concentrated.
Equity markets
In the United States, Wall Street entered the month close to all-time highs, still supported by expectations surrounding artificial intelligence and continued investment in the semiconductor sector. Overall, however, the upward momentum in the main indices weakened compared with previous months.
The S&P 500 ended June slightly lower, while the Nasdaq experienced greater volatility, particularly in the final part of the month, as investors took profits in technology stocks and in some of the main beneficiaries of the AI-driven rally. The semiconductor sector nevertheless remained positive and once again confirmed its role as the main driver of the US equity market.
Market participation, however, remains limited to a relatively small number of companies. At the same time, the increased use of leverage, the growth of investments in leveraged ETFs and strong investor interest in companies with high valuations or limited current profitability are signs of rising speculative appetite.
In Europe, equity markets benefited from lower geopolitical tensions and falling energy prices. The Italian market remained one of the strongest performers in the region, while Frankfurt and Paris recorded more subdued results. The Swiss market also showed solid resilience, supported by the defensive nature of many of its largest listed companies.
The European economic backdrop nevertheless remains fragile. The region continues to be more vulnerable than the United States to energy-price shocks, industrial weakness and softer global demand.
In Asia, Japan continued to perform well, supported by solid corporate earnings, strong international investor interest and a weak yen. China, meanwhile, showed signs of stabilisation, with some economic indicators improving, but not enough to materially change the broader outlook for the economy.
Asian markets with greater exposure to technology and semiconductors also corrected in the final part of the month, confirming the sector’s sensitivity to any change in growth expectations.
Monetary policy and inflation
Central banks maintained a cautious stance, with a greater focus on containing inflation.
In the United States, the Federal Reserve left interest rates unchanged. However, its new Chair, Kevin Warsh, adopted a more restrictive communication style, reducing the reliance on forward guidance and stressing the need to preserve flexibility in future monetary policy decisions.
This shift has made markets more sensitive to individual macroeconomic releases. Investor expectations are now divided between the possibility that rates remain unchanged for the rest of the year and the risk of an additional rate increase should inflation remain persistently high.
In the Eurozone, the European Central Bank continued to highlight the inflationary risks stemming from energy prices. Despite the fall in oil prices during the second half of the month, policymakers believe that more convincing and sustained evidence is needed before considering a meaningful easing of monetary policy.
The experience of recent years has shown that commodity shocks can affect the economy with a delay and keep inflation elevated for longer than initially expected.
Fixed income markets
Government bond yields moved within relatively narrow ranges during the month. The US ten-year Treasury yield ended June at around 4.5%, while German Bund and Italian BTP yields remained broadly stable.
The fall in oil prices helped reduce near-term inflation expectations, but it was not enough to trigger a meaningful decline in bond yields. Markets continue to price in a scenario in which interest rates remain elevated for an extended period.
On the macroeconomic front, some data pointed to a gradual slowdown in the US labour market and consumer spending. These developments could help contain inflation over the coming months, although they must be assessed alongside pressures from fiscal policy, high debt issuance and energy costs.
In corporate credit, signs of deterioration are emerging in lower-rated segments, with spreads widening in the most speculative areas of the high-yield market. Against this backdrop, we continue to favour investment-grade issuers, strong balance sheets and short- to intermediate-term maturities, which allow investors to benefit from still attractive yields while limiting exposure to interest-rate volatility and credit risk.
Commodities and precious metals
Oil was one of the most volatile assets during the month. After rising during the military escalation, expectations of a normalisation of flows through the Strait of Hormuz led to a rapid correction, with Brent crude falling back towards the USD 72–75 per barrel range.
Lower energy prices are supportive for consumers and corporate margins, particularly in Europe. However, they do not fully eliminate inflation risks, as central banks remain concerned about possible second-round effects on wages and prices.
Gold, meanwhile, recorded one of its weakest monthly performances of the year. The precious metal was penalised by a stronger US dollar, higher real yields and the Federal Reserve’s more restrictive stance.
The correction was also amplified by profit-taking and liquidity needs during periods of heightened geopolitical tension. Despite an unfavourable short-term trend, gold continues to play a strategic diversification role, particularly in an environment characterised by high public debt, geopolitical uncertainty and the risk of renewed inflationary shocks.
Our view
June confirmed the resilience of financial markets, but also highlighted elevated valuations and the growing concentration of equity-market performance.
The decline in oil prices and the easing of tensions in the Middle East have reduced some of the most immediate risks to the global economy. At the same time, persistently high interest rates, weakness in some areas of demand and signs of speculative excess suggest that a balanced approach remains appropriate.
We therefore believe that equity exposure should remain selective, with a preference for high-quality companies offering strong balance sheets, visible earnings and the ability to generate sustainable cash flows. Technology and artificial intelligence remain important long-term structural themes, but the valuations reached by some companies require greater discipline in security selection and position sizing.
In fixed income, current yields continue to offer attractive opportunities, particularly in the investment-grade segment and across short- and intermediate-term maturities. Alternative investments and precious metals also retain an important role in improving portfolio diversification and overall resilience.
Looking ahead, attention will remain focused on the durability of the agreements in the Middle East, inflation developments and future central-bank decisions. In a market supported by high expectations but still exposed to several sources of uncertainty, we continue to believe that prudence, diversification and rigorous investment selection remain essential.