Global equity indices fell in June after the US escalated a confrontation with partners around trade tariffs.
The STOXX® Global 1800 Index dropped 0.2% over the month, dragged lower by shares in Asia and Europe. The index is now up 3% for 2018 in euro terms, and up 0.2% in dollars, with many country benchmarks and strategies posting losses for the first six months amid rising interest rates and political and economic nationalism.
In June, US President Trump said he might impose a 20% tariff on imports of European cars, following on new duties on steel and aluminum, and suggested – but later backtracked – plans to restrict Chinese investments in some sectors such as technology. The European Union, Canada and China have already retaliated by either threatening or imposing levies of their own.
China was at the epicenter of investors’ selling during the month, with the STOXX® China A 900 Index dropping to bear-market territory, or a decline of at least 20%.
Amid investors’ apathy, few parts of the market performed well in the month. Minimum variance strategies stood out, delivering positive returns across the globe, and with lower volatility.
Thematic investing, on the other hand, broadly underperformed. The exception among the iSTOXX FactSet Thematic indices was the iSTOXX® FactSet Digitalisation index, which tracks the leaders in digital technologies.
Most factor-based strategies struggled as well. Value stocks, in particular, were weak for a second month, in what could be a reflection of sobering economic growth expectations.
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