Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Senior Investment Editor
Summary: The global financial situation grows increasingly concerning, which is evident in this month’s financial performance as equities, bonds and commodities all end in minus.
Global equities fell more than six percent. This could indicate that the events that have dominated 2022, i.e., the Russian invasion of Ukraine, supply chain issues, commodity and energy shortages, which among other things have driven up inflation to numbers we haven’t seen in several decades are still prevalent.
All equity regions fell more than five percent. The Western world suffered the biggest losses, whereas Asia and Emerging Markets performed slightly less negative.
Within the equity sectors, there are big differences. Most notably, while the energy sector was the best performer in May, it is now the second-worst performer. The fall can probably be attributed to a very sharp increase previously in the year and the increased fear of recession, especially in the US, which could lead to less energy consumption. The sector is still the best performer for the year.
Commodities fell by more than seven percent in June. Some of the reasons for this are that a global recession could lead to less demand for core commodities, as well as prolonged lockdowns in China. While oil and gold fell less, there was negative performance across almost the entire commodity scale. Natural gas, wheat and cotton were among the worst performers.