Market outlook for June
It might have been hard to imagine that trade tensions would return so soon for markets. But here we are a worried about the impact of the latest trade escalation between US and China.
Feeling the tensions yet?
From what the headlines are suggesting, the lack of communication between the two parties had certainly served as a jarring prompt that the impasse between the two countries may sustain for some time to come.
More importantly, however, it is the economic impact one might have to grapple with as we head into June to look back at May’s performance. The US 10-year treasury yields had notably declined to levels not seen since September 2019, driven by the search for safety. Meanwhile the US 3-month/10-year yield curve had also returned into a state of inversion as one would recall the bout of recession concern that had brought about in March. May’s economic indicators are due to stream into June slowly, and the reflection of the trade impact could bring about another round of concerns, one to watch.
Moving into June, the US-China trade tensions would likely remain the biggest threat for markets throughout June. The US is expected to hold China tariffs hearing on June 17, ahead of the G20 meeting in Osaka on June 28 and 29, where a meeting between Presidents Donald Trump and Xi Jinping is still uncertain at the time of writing. These will be the various nodes where the market may find heightened sensitivity in terms of risk sentiment. Watch the likes of US Treasuries, USD/JPY and gold.
Besides the above, a couple of central bank meetings will be lined up. The June 4 Reserve Bank of Australia (RBA) meeting had investors see a cut in interest rates to 1.25%. Little changes are anticipated from the likes of the June 6 European Central Bank (ECB) meeting or the June 19-20 Bank of Japan (BOJ) updates, but the June 18-19 Federal Open Market Committee (FOMC) meeting could shake things up for markets. Against the current backdrop of trade tensions and growth concerns, the market is pricing in approximately 80% change of a cut in rates by year-end. The lack of a dovish tinge here may well see to concerns piling in.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
