Share markets saw robust gains during June despite bond yields rising. Early in the month, US regulators forged an agreement to suspend the debt ceiling until 2025, allaying investor concerns of a possible debt default. The US Federal Reserve kept rates on hold in June while the Bank of England and European Central Bank each delivered rate hikes. The RBA elected to increase the cash rate by 0.25% to 4.10%, prior to the release of May’s monthly inflation indicator which saw annualised inflation print 5.6%, down from the 6.8% reading as fuel costs eased.
Australian shares gained 1.9%, led by the Materials and Information Technology sectors. Currency-hedged international equities surged 5.6% due to a rally in US shares (S&P500 +6.5%) and Japanese shares (Nikkei +7.6%). Unhedged international equities gained 3.1%, blunted by the Australian dollar which increased 2.5% against the US dollar and 6.1% against the Japanese yen.
The Australian 10-year government bond yield rose by 42bps to 4.02% and the 2-year government bond yield rose by 67bps to 4.22%. The US 10-year government bond yield rose by 19bps to close at 3.84% and the US 2-year government bond yield rose by 49bps to 4.9%.
AUTHOR: Allan Grant and Ian Holliday
Disclaimer: The above is intended as general market commentary only and is not intended as, and does not constitute, advice of any kind. No liability is accepted for any action taken based on the above or for any loss suffered as a result of reliance on the same.
