Monthly Market Review - June 2024
Global markets continued their upward trend in June, with the MSCI World Islamic Index rising by 1.22% for the month, up 4.34% year-to-date. The Dow Jones Sukuk Index also recorded a modest increase of 0.8% for the month, returning 0.6% year-to-date as longer-term yields eased.
In the US, inflation continues to gradually trend lower, with the FED acknowledging the progress made but challenges remain as the economy continues to grow at a healthy pace. With PMI at 51.7, signaling an expansion, albeit accompanied by a tick-up in the unemployment rate to 4%. There are however mixed indications, with a slowdown in consumer spending having emerged leading to increased anticipation for monetary policy adjustments. While the FED guides for a single cut, the markets are still expecting a bit more than just one cut by the end of the year.
The British pound has slightly weakened versus the U.S. dollar following the announcement of an early election scheduled for July 4th. A significant victory for the Labor party could potentially support the pound and UK government debt through enhanced political stability. Despite reaching the Bank of England's (BoE) 2% inflation target for the first time in three years, the BoE maintained interest rates at 5.25%, hinting at a potential adjustment in the upcoming August meeting.
Across Europe, France called for snap elections after the ruling party's defeat in the European parliamentary elections. The resulting uncertainty caused turmoil in equity and debt markets due to concerns over France's budget deficit and a potential far-right victory. The gap between German and French bond yields widened as investors worried about France's debt burden. In broader Europe, while inflationary pressures are generally moderating, the year-over-year CPI ticked higher at 2.6%. The Manufacturing PMI in Europe deteriorated further to 45.6, indicating economic weakness.
In China, consumer price indices have shown a consistent uptick, advancing by 0.3% year-on-year in May, representing the fourth successive month of growth and suggesting a rebound in consumer demand. Nevertheless, the Producer Price Index (PPI) experienced a less severe drop of 1.4% in May, compared to the 2.5% decline in the preceding month, pointing to ongoing challenges within the industrial sector. The Manufacturing PMI in China remained constant at 49.5, alongside warnings from the country's central bank governor regarding anticipated subdued credit expansion.
Looking forward, markets are expected to remain responsive to changes in central bank policies and geopolitical developments, emphasizing the importance of maintaining a diversified investment portfolio and being prepared for any potential market disruptions.
Source: Bloomberg
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As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
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