Information technology outpaces energy as the top S&P 500 sector in June
02 Jul 2021While performance in the S&P 500 Index has been dominated by energy and financials year to date, information technology has led all sectors in June. Concurrently, the tech-heavy NASDAQ Composite Index has outpaced the S&P 500 Index in June. Financials, and particularly banks, had been among the top-performing sectors until May but have detracted performance in both indices in June, with US Treasury yields declining during the month. (Source: Bloomberg as of 30 June 2021).
US Treasury yields decline again in June
02 Jul 2021US Treasury yields, which rose sharply in the first quarter of this year, and were broadly flat over April and May, were down again in June. 10-year yields started the month around 1.6% and have approached 1.45% as of 30 June (source: Bloomberg). During the month, the US Federal Reserve (Fed) indicated that its first interest rate increase might happen in 2023, as opposed to 2024. Despite the Fed’s latest forward guidance and inflation being on the rise, Treasury yields have remained under pressure.
Natural gas rallied on expectations of high temperatures in the US
25 Jun 2021With above average temperatures predicted for most of the United States for July (National Oceanic and Atmospheric Administration, June 2021), the demand for electricity to power air-conditioning could also be above average. 40% of electricity in the US is made using natural gas (U.S. Energy Information Administration estimate, February 2021). More than 35% of natural gas consumed in the US goes into electric power, which is the largest source of natural gas demand by sector (U.S. Energy Information Administration). In 2020 electricity was the only sector to have increased its demand for natural gas. Natural gas prices have rallied sharply in the past month reflecting this potential for high demand, which marks a (seasonal) six-year high.
Platinum and palladium are down, but not out
25 Jun 2021Platinum and palladium have both experienced a slowdown in their demand from the auto sector which is currently facing difficulties in sourcing semiconductors. The outlook may improve once these supply chain issues are resolved. Both metals have also drawn down sharply alongside gold in response to the latest Federal Reserve meeting that ended on 16 June. Fundamentally, both metals are expected to remain undersupplied this year.
Tech bounces back to lift US equities
25 Jun 2021US equities have been buoyed by a resurgence in tech stocks in June with the NASDAQ Composite Index outpacing the S&P 500 Index month to date. Within the S&P 500 Index, energy stocks continue to lead the way this month but information technology, consumer discretionary, and communication services have joined the ranks among the top performing sectors (as of 23 June 2021. Source: Bloomberg).
UK equities buoyed by improving economic data
18 Jun 2021With the recent easing in lockdowns and economic activity picking up again, UK equities have started building positive momentum this year. As of 16 June, the FTSE 100 Index is up almost 13% this year (in GBP total return terms. Source: Bloomberg). UK annual inflation rate has jumped to 2.1% in May, its highest level since July 2019 (Source: Trading Economics). Given their notable weight in the FTSE 100 Index, strength in financials and energy stocks are helping lift UK equities.
10-year US Treasury yields fall below 1.5%
11 Jun 2021Despite recent increases in inflation, the US Federal Reserve (Fed) is yet to pivot its stance on monetary policy accommodation. US Treasury yields, which rose sharply in the first quarter of this year and were broadly steady in April and May, have fallen at the start of June. Continued dovishness from the central bank could put downward pressure on yields, while any indication of policy tightening could cause yields to rise. Markets are keeping a close watch on the actions of the Fed.
FTSE MIB in the lead among major equity indices
11 Jun 2021Strong positive momentum since April has helped the Italian FTSE MIB Index overtake the S&P 500 Index. As of 09 June, the FTSE MIB Index was up 16.4%, while the S&P 500 Index was up 15.1% (both in USD terms total returns year to date).
Oil prices responding positively to OPEC+ demand outlook
11 Jun 2021Last week, the Organisation of the Petroleum Exporting Countries and its partners (OPEC+) decided to increase supply only gradually amid a backdrop of improving demand. Following its increases in May and June, total increases would now amount to 2m barrels per day over the period. Oil prices have responded positively to this at the start of June.
Oil prices respond favourably as OPEC+ see improving demand outlook
04 Jun 2021The Organisation of the Petroleum Exporting Countries and its partners (OPEC+) have decided to increase supply only gradually amid a backdrop of improving demand. Following its increases in May and June, total increases would now amount to 2m barrels per day over the period. The group had cut supply by 9.7m barrels per day last year.
Source: WisdomTree, Bloomberg. Data as of 02/06/2021.