Monthly Review of June 2020

  • 08 July 2020
  • 5 mins reading time

Indications of economic recovery spurred gains across most equities during June, but spikes in virus contagion numbers had a limiting effect on rises. Government bond yields were little changed, and were outperformed by corporate bonds.


US equity prices rose overall, but not by as much as was recorded in other regions. Some economic data showed signs of recovery, but a number of states slowed or halted the lifting of lockdown measures as virus cases surged. With the continued demand for online services and a glimmer of light for bricks-and-mortar stores, IT and consumer discretionary sectors led stock price gains while the stocks associated with lower levels of risk, such as utilities, fell out of favour.

The easing of lockdown measures also lifted stock prices in the UK along with indications that the economic downturn might have passed its worst point. However, the latest monthly data indicated a 20% decline in the UK economy in April – the first full month with lockdown restrictions imposed. Add to that the looming deadline of a Brexit transition extension, and the Bank of England’s extension of financial stimulus measures came as no surprise.

It was a similar picture across the eurozone with borders being opened and travel restrictions being lifted. Equity prices rose across all industrial sectors for the region with banks among the highest risers.

Elsewhere, hopes of recovering economic activity were complemented by the low value to the US dollar which boosted the export prospects of non-US companies.


The demand for and prices of government bonds remained largely unchanged. There was a brief move out of bonds and into stocks when the US central bank, the Federal Reserve, indicated that it had no intention of raising interest rates in the foreseeable future. But that move reversed as some states reinstated lockdown measures, encouraging investors to move money back into the lower-risk rated opportunities that government bonds can offer.

By contrast, demand for and prices of bonds issued by companies rose. This was driven by more financial stimulus from governments and central banks better enabling companies to meet their bond payment obligations.


Prices of commodities rose over the month as signs of economic recovery suggested a greater demand for raw materials. Oil prices were notably higher after the Saudi-led Organisation for Petroleum Exporting Countries and Russia agreed to maintain lower rates of oil production.

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