Investment

June General Markets Comments

by Pierre Mouton

June General Markets Comments

« Driver’s Seat » – Sniff ‘n’ the Tears, 1978

AI, Big Tech and consequently the Nasdaq are in the driver’s seat in 2023. They’ve set the pace for what is, so far, a very good year for global equity markets, notwithstanding the immense performance gap between sectors and styles: to wit, the MSCI World Growth is up 26.5% at the end of June, versus only +2.5% for the MSCI World Value.

June 2023 saw, from the middle of the month, some kind of marginal rebalancing: upside participation has been a tad broader than previously this year, which is healthy (the S&P 500 and the Nasdaq ended up the month with almost exactly the same performance, slightly below +6.5%). This is also logical because interest rates were not supportive of expanding valuations last month: the US and German 10 year yields respectively rose 19 and 11 bps.

In the meantime, Credit was up again (+2% for the Itraxx Crossover in June, +7.6% year to date), Gold lost ground (-2.2%) as well as the dollar versus the euro. Currency markets have also shown some large moves this year, as the euro is up 1.9% versus the dollar, but the most impressive is the Japanese Yen fall (-10.1%) and, to a lesser extent, the Chinese Renminbi (-5.2%). The spectacular 21% upside in the Topix finally “only” translates into a +10% return year to date in USD.

Markets seems to tell us that the Fed will succeed in engineering a soft landing in the US, especially if upside participation broadens; markets often lead fundamentals, so this should be viewed as good news. What remains unclear is the capacity for valuations, and in particular for the most hype sectors, to stay at these levels.

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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