Market Review – June 2009

As the stockmarket saying goes – ‘Sell in May and go away…..’

After the rallies of March, April & May, June was a quieter month for global equities with the MSCI World Index up 0.5%.

Equities struggled in the middle of the month in a quiet environment, with emerging markets giving back some of the very strong gains experienced since March. The MSCI Emerging Markets Index was down slightly for the month returning -0.4%.

Volatility levels have also retracted to moderate levels from their all time high over the past year.

Investors focused on the potential strength of a global economic recovery and look to be taking a ‘wait and see’ stance with regard to the ‘green shoots’ of economic recovery that had emerged in data releases in the first half of the year.

Commodity prices started the month strongly, continuing the rally in raw material and energy prices year to date. However, prices sold off later on in the month on the back of sluggish economic recovery / growth forecasts from the World Bank. The oil price retracted from its year high of over $72 per barrel and ended the month below $70 per barrel.

Markets are now focusing on the upcoming company earnings reporting season, with a focus on the conviction companies have for their outlook and guidance. To date, dividend payments have been reduced by a number of companies (circa 40%) in the MSCI World Index. The majority of these reductions are in the form of dividend cuts rather than fully cancelling dividend payments so far.

Markets Year to Date (to 30th June) Euro Return
Ireland +15.5%
UK +0.8%
USA +3.2%
Nasdaq +16.4%
Europe +5.1%
Japan +9.4%
Pacific Basin +28.8%
World +6.7%
Bonds +0.2%

Source – KBC Asset Management & Irish Life Investment Managers

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