The combination of an easing trade war, increased economic uncertainty, and expectations of monetary stimulus from central banks made for a perfect storm in June, where all asset classes in our portfolios posted positive returns in the month.
The escalation in trade war rhetoric that drove markets down in May all but abated in June, as the meeting between U.S. President Trump and Chinese President Xi Jinping resulted in the two sides agreeing to re-engage in talks and provide certain concessions.
Although no timelines were outlined during the meeting, the immediate market reaction was positive and we saw equity markets rally globally, with U.S. equities continuing to outperform global stocks. Developed and emerging market equities are up 15% and 11% (in GBP), respectively, through the end of June.
Gold also had strong performance in June, as the market increasingly expects the Federal Reserve to cut short-term interest rates (which should weaken the dollar) and economic uncertainty grows. Additionally the European Central Bank is expected to provide additional stimulus measures in the form of Quantitative Easing.
US dollar sukuk indices and funds also posted solid 1-2% returns on the positive market sentiment and easing concerns around interest rate hikes.
Source: Reuters Eikon as of June 30, 2019. Please note that performance shown are or Wahed model portfolios. Actual client performance will depend on the timing of funding and intra-quarter drift from targets. Past performance is not indicative of future results.