Equity markets were sharply weaker in June to rule off what has been a forgettable first half of calendar 2022 as markets have struggled in the face of higher inflation and rising bond yields. The Australian market was down 8.8% for the month and 6.5% for the financial year. Most other global markets followed a similar pattern with the US down 8.3%, Europe 8.5% and the UK 5.2%. China bucked the trend improving by 6.7% as COVID restrictions in Shanghai were eased following a strict lock down.
Bond markets were marginally weaker with Australian 10-year bond yields increasing 32 basis points to 3.66% and its US counterpart closing 13 basis points higher at 2.98%.
As expected during the month the US Federal Reserve increased the Fed funds rate by 75 basis points and the Reserve Bank followed suit increasing cash rates by 50 basis points. It is likely global central banks will continue to increase rates until they are satisfied that inflation pressures have started to moderate. The US dollar strengthened against most major currencies reinforcing its safe-haven status, with the Australian dollar falling 4.1% against the greenback to finish at US68.8 cents.
In commodity markets, oil fell by 7.8% on the expectation of lower demand due to weaker economic conditions, the iron ore price was 2.3% weaker as were most base metals with copper down 11% and aluminium 15%.