Equity markets were stronger in June. In the US, the S&P 500 rose +3.5%, the Nasdaq increased +6.0%, whilst in the UK the FTSE100 declined -1.3%. The US markets were boosted by growing confidence that inflation is slowing, and interest rate cuts are on the horizon. During the month, the Canadian central bank cut its key interest rate by 25 basis points to 4.75%, making it the first member of the G7 to lower rates.

Domestically, the ASX All Ordinaries Accumulation Index rose +0.7%. Top performing sectors included financials and consumer staples, whilst materials were the worst performer, due to concerns about the Chinese economy and its demand for commodities.

In Australia, inflation continues to track higher than targeted by the Reserve Bank (RBA). Given this high inflation and recent expansionary fiscal policy from the federal government, this potentially sees the need for the RBA to lift rates in August, however, to date it appears equity investors on the ASX are taking the view that the cycle of rate hikes is almost over. In addition, we would note valuations across a wide range of small to mid-cap stocks on the ASX are still very attractive, which should lead to investors being well rewarded over the next few years.