Market Commentary by Broadstone for June 2015

06/07/2015

 

  • Broadstone expects continued market volatility in the short term
  • Global stock markets fell by 5.2% over June
  • US economy continues to strengthen
  • UK gilt yields continued to rise - 2.75% at end of June 

The independent pensions and investment expert Broadstone has issued its latest Market Pulse. Peter Dean, investment consulting director, says:

“Global stock markets fell by 5.2% over June in Sterling terms, driven by concerns over the impact of Greece’s financial crisis and sharp falls in Chinese stocks.  The impact of the Greek financial crisis on global markets should be limited, as most international banks have sold their Greek bonds and other holdings.  However a Greek exit from the Europe will have wider implications for other peripheral European countries and the European project itself.

“As a result, we believe in the short term we are likely to see continued market volatility until steps are taken to deal with the Greek debt issue.  However, European leaders are unlikely to deal with the underlying structural reform still needed within the Eurozone anytime soon.

“In other news, China’s Shanghai Composite Index tumbled 22% since hitting a seven-year high on June 12.  Speculation suggests that much of the sell-off has been attributable to leveraged stock investors being forced to liquidate their holdings.  China has tried to calm markets with a cut in deposit rates for the fourth time in eight months to 2.0% and an easing of reserve requirements.

“Despite the focus on Greece, the US economy continues to strengthen with firm retail sales, rising home sales and strong corporate hiring.  Whilst the Federal Reserve wants to see more evidence of a rebound before lifting rates, commentators still expect the start of a gradual rise in interest rates before the end of the year.”