Global Equities Wobble as Geopolitics and AI Jitters Snap the Rally
Global equities slipped for only the second time in fifteen months (MSCI World -0.7% MoM), though they remain up 9.7% YTD. June was defined by geopolitical volatility, as US forces struck Iranian targets before an interim peace deal reopened the Strait of Hormuz, sending Brent crude to US$73/bbl (-21% MoM). AI sentiment also cooled after Broadcom’s disappointing outlook reignited concerns over AI capex returns, dragging the S&P 500 semiconductor sector down 15% MoM. Defensive stocks took the baton, with US value stocks (+16% YTD) comfortably outperforming growth stocks (+5% YTD) in the first half of 2026.
Emerging Markets Struggle as China Drags the Bloc and Dollar Firms
EM equities struggled to keep pace in June (MSCI EM -1.4% MoM), with the weakness rooted in China. The Hang Seng China Enterprises Index slumped 10% MoM (-15% YTD) as disappointing macroeconomic data weighed on sentiment – retail sales fell 0.6% YoY, marking the first contraction since China’s post-COVID reopening in 2022. Fed Chair Kevin Warsh’s more hawkish-than-expected debut also weighed on markets, leaving rates unchanged while signalling the possibility of a 2026 rate hike. That repricing lifted the US Dollar Index by 2.3% MoM, tightening financial conditions and pressuring dollar-sensitive EM equities across the bloc.
South African Equities Slip as Precious Metals Miner Weigh
The JSE fell for a second consecutive month (FTSE/JSE Capped All Share -3.7% MoM, -3% YTD), as precious metals miners shaved 4.5 percentage points off the index in June. Gold fell 12% MoM towards US$4,000/oz, while platinum tumbled 19% MoM, pressured by a firmer US dollar and a more hawkish-than-expected Fed that lifted real yields and reduced the appeal of non-yielding metals. Macroeconomic data also softened – the PMI slipped to 47.3 (from 50.8), and May’s trade balance swung to a R1.8bn deficit on the back of a higher oil import bill. Headline inflation ticked up to 4.5% YoY, although easing oil prices should help temper inflationary pressure in the months ahead. The 10-year government bond yield drifted 0.2% lower to 8.4%, while the rand remained 1% stronger YTD at R16.40/US$1.
