As June came to a close, financial markets were increasingly driven by easing geopolitical tensions in the Middle East and a more resilient global economic outlook. An interim agreement between the US and Iran reduced concerns about disruptions to global energy supplies, leading to a sharp decline in oil prices and easing inflationary pressures. Economic data were also supportive, particularly in the US, where signs of an improving labour market reinforced confidence in growth prospects despite a more hawkish stance from new Fed Chair Kevin Warsh. Equity markets continued to advance, supported by robust corporate earnings and strong investment in artificial intelligence, while bond markets stabilised as the outlook for inflation became more balanced. Against this backdrop of falling energy prices, improving growth momentum and contained inflation risks, we have increased our equity allocation from neutral to overweight.

Highlights this month:

• Interim US-Iran deal pushes down oil prices
• Improvement in US job market, Fed Chair adopts hawkish tone
• Equity allocation increased to an overweight