Trade wars escalate, the Fed raises rates and the World Cup kicks off

July 5, 2018

What happened in June?

After a strong start to the month, equities fell in the latter half but hung on to finish June in positive territory. Solid U.S. economic data, including a healthy jobs report, GDP growth projections, strong consumer spending, and easing geopolitical tensions allowed U.S. equities to rally +3.0% between June 1-12. However, the tide quickly turned as U.S. tariffs on steel and aluminum resulted in retaliatory tariffs from the Eurozone and China. It was announced that Harley-Davidson, the U.S.-based motorcycle manufacturer, will be shifting production overseas to avoid the E.U tariff placed on its product. The combined macroeconomic and sentiment concerns pulled U.S. stocks -3.0% from June 13-27 before rallying over the last two sessions to finish the month in positive territory.

Across the globe, international stocks closed negatively for the month and are now -10.1% from their 2018 high on January 26. Among the issues, decreasing industrial output in the Eurozone could slow economic growth in the region while financial markets in China struggle due to increasing trade tensions along with the continued attempt to deleverage.