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It is not unusual for markets to experience volatility spikes during lighter trading volume summer periods.

A relatively buoyant environment for Equity Market Neutral strategies.

The month of June was relatively noisy for markets, especially in Europe where geopolitical risk remains one of investors’ primary areas for concern. In the US, the latest macroeconomic data continues to indicate that the Fed might succeed in piloting the economy to a soft landing.

Risk appetite returned to markets after a cooling period during April. Economic indicators in western economies continue to point to a phase of deceleration across most economic powerhouses, but there is no evidence of severe recession looming. However, there is proof of increasing dispersion across financial assets returns and risk premia.

After five months of gains, equities finished down in April in a relatively volatile market. Although the EPS beat/raise has been high, markets focused more on top-down factors than micro news-flow.

Markets held up well during March, supported by robust economic indicators coming from the US, manufacturing and services PMIs improving in China and an increasingly dovish stance from the ECB.

Since the market has incorporated the fact that there would be fewer rate cuts by the Federal Reserve and they would probably come later than expected at the end of 2023, core equity indices have continued to perform well in Northern America and Western Europe.