Introduction

June 2023 saw a steadying of investor sentiment as economic data pointed to slowing-but still resilient-growth across major developed markets. Inflation continued to moderate, and central banks adopted increasingly nuanced positions in response. Equity markets broadly advanced, led by gains in U.S. and Japanese stocks, while bond yields rose modestly amid mixed signals from global monetary authorities. Sector rotation into cyclical equities and industrials became more pronounced, reflecting cautious optimism around a potential soft landing.

United States

U.S. equities posted strong gains in June, with the S&P 500 rising approximately 6.5% and the Nasdaq Composite climbing over 6.6%. The rally was driven by strength in technology, industrials, and consumer discretionary sectors. Markets were buoyed by softer inflation data and investor enthusiasm around AI-related innovation, which continued to boost semiconductor and cloud computing stocks.

The Federal Reserve paused its rate hikes at its June FOMC meeting, holding the target rate at 5.00%–5.25%. However, Fed Chair Jerome Powell signalled that more hikes could come later in the year, citing the need to bring core inflation down sustainably. The May CPI print, released mid-June, showed a year-on-year rise of 4.0%, the lowest since early 2021.

Europe

European markets ended the month mixed. The Euro Stoxx 50 advanced 1.8%, supported by industrials and banks, while consumer-focused names lagged amid weak retail data. Germany and France posted sluggish economic indicators, though sentiment in Southern Europe remained relatively firm.

The European Central Bank raised interest rates by 25 basis points, taking the deposit rate to 3.5%, and indicated at least one more hike was likely in July. Inflation in the eurozone eased to 5.5% in June, down from 6.1% in May, but services inflation and wage pressures remained elevated. The ECB reiterated its data-dependent approach and a desire to avoid overtightening in a softening growth environment.

Asia-Pacific

Asia-Pacific markets delivered mixed results in June. The Nikkei 225 rose another 7.5%, hitting multi-decade highs as the yen weakened and foreign inflows accelerated. Strong corporate profits and renewed confidence in Japan's economy helped sustain momentum.

In contrast, Chinese equities continued to struggle, with the Hang Seng Index falling 2.5% and the Shanghai Composite declining 1.3%. Disappointing economic data-including weaker-than-expected exports, retail sales, and credit growth-dampened investor enthusiasm. Markets widely anticipated a stimulus response from Beijing, though official announcements remained limited by month-end. Australia's ASX 200 rose 1.4%, led by banks and industrials, as the Reserve Bank of Australia raised rates to 4.10% and reiterated its inflation-fighting commitment.

Emerging Markets

Emerging markets saw mild gains in June, with the MSCI Emerging Markets Index rising 2.2%. Latin American equities outperformed, buoyed by improving commodity prices and currency stability. Brazil's central bank held rates at 13.75%, but dovish signals hinted at possible cuts later in the year.

India's equity markets rose modestly, supported by solid corporate earnings and easing inflation. Southeast Asian markets remained range-bound, while Turkey and Argentina faced renewed currency depreciation and inflationary pressure. Portfolio flows into EM debt picked up slightly as U.S. dollar strength moderated.

Commodities

Oil prices remained volatile but ended the month slightly higher. Brent crude traded between USD 72 and 77 per barrel, supported by tightening U.S. inventories and market speculation over potential Saudi output cuts. However, fears of slowing global demand capped the upside.

Gold prices softened slightly, closing the month near USD 1,910/oz, amid improving risk sentiment and rising real yields. Copper rebounded modestly as China's industrial sector showed signs of stabilisation, though broader commodity sentiment remained cautious.

Fixed Income & Currencies

Global bond yields edged higher in June. The U.S. 10-year Treasury yield rose from around 3.65% to 3.82% as markets digested the Fed's hawkish tone. Credit spreads narrowed in investment-grade bonds but remained wide in high-yield and emerging market sectors.

The U.S. dollar was mostly stable against major peers, with slight appreciation versus the Chinese yuan and Japanese yen. The euro strengthened following ECB guidance, while the Singapore dollar remained firm amid steady economic data and MAS policy consistency.

Outlook

As we move into the second half of 2023, investor focus remains on inflation trajectories, consumer resilience, and the response from central banks navigating conflicting signals. While global growth is slowing, the baseline scenario has shifted increasingly toward a soft landing, albeit with risks concentrated in sectors sensitive to interest rates and credit conditions.

Brightness Capital & Asset Advisory maintains a selective stance, emphasising earnings visibility, balance sheet strength, and exposure to structural growth themes. With uncertainty still elevated, we continue to advocate for portfolio diversification, tactical flexibility, and a disciplined, long-term perspective.