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16th July 2026
Cappuccino Commentary
June 2026 Review
Market returns were mixed in June as investors navigated a complex environment combining de-escalation in the Middle East with uncertainty over the future of AI spending. Tensions between the US and Iran eased following the signing of a Memorandum of Understanding (MoU) which put a pause on the conflict and helped reopen the Strait of Hormuz. While a positive development, markets responded cautiously, with the flow of oil tankers remining significantly below pre-war norms.
In the midst of geopolitical tension, June saw SpaceX list on the US tech index at a record valuation of $1.8 trillion. The stock rallied to $ 2.1tn on its debut trading day, making Elon Musk the world’s first trillionaire. Whilst an apparent success with the IPO raising $75bn, the stock market listing has renewed concerns around elevated valuations in tech and AI related stocks. The AI capital expenditure (capex) theme has been a significant source of market volatility. Investors remain uncertain about whether unprecedented levels of investment in infrastructure and development will generate sufficient returns, while the timeline to profitability remains unclear.
Equity markets were mixed in a month that was characterised by a wave of sector rotation, with previous winners giving up gains in favour of market stalwarts. AI-related names gave back some of their gains while other sectors including healthcare, financials and industrials rallied. The tech dominated US stock market finished slightly negative (-0.2%) whereas value and small cap styles performed well during the month. Asia-ex Japan was the worst performing region (-1.7%) over the month as many AI beneficiaries (i.e. Taiwan Semiconductor, Samsung Electronics and SK Hynix) finished June lower.
The UK market generated gains of 1.2% in the face of political instability. News of Sir Keir Starmer’s resignation has had little impact on equity markets, with markets instead focusing on who Andy Burnham – Starmer’s more than likely successor – will appoint as Chancellor. European equities also performed strongly, returning 2.2% in a month where the ECB hiked rates by 0.25% to 2.25%. The composition of the European market has meant that it has been largely unaffected by recent volatility in the technology sector and has benefitted from the outperformance of value stocks. Finally, Japan posted gains of 1.1%, with improving corporate guidance in chip-related sectors and optimism around a U.S.-Iran ceasefire being the key drivers.
Bonds delivered modest positive returns as sovereign yields declined across many markets, providing some relief despite earlier pressures from geopolitics. Gilts had another positive month up 1%, compounding gains in May, but remain down (-2.3%) year to date after a difficult March. Despite a strong rebound in the last two months, gilts continue to significantly lag short duration credit in 2026, which has weathered volatility well due to having a lower sensitivity to interest rate expectations.
Oil prices reverted to pre-conflict levels post the US-Iran Memorandum of Understanding (MoU), which has helped to ease inflationary pressures to the benefit of interest rate sensitive sectors such as listed property (+3.1%) and infrastructure (+2.3%). Gold was one of the worst performing asset classes down -10.6% on the back of a stronger US dollar, reduced ‘safe haven’ demand post-de-escalation, and hawkish rate outlook. Gold has now fallen 25% from January all-time highs, with the retail money which flooded in to help fuel the rally in 2025 and first quarter 2026 starting to look elsewhere.
At the end of the month, we were hopeful that the MoU between the US and Iran would lead to an abrupt and lasting resolution but events over the last week have dashed those hopes. The unpredictability of both Trump and the Iranian regime have made markets particularly challenging to navigate, reinforcing the importance of remaining focused on underlying fundamentals. As always, we will continue to take a disciplined, long-term perspective, with diversification being our key tool for managing risk and driving long term returns.
Please note:
For regulated financial advisers and investment professionals only. Copia does not provide financial advice, and the contents of this document should not be taken as such. The value of investments can increase and decrease, past performance and historical data cannot guarantee future success, and any references to individual stocks or asset classes are made purely for illustrative purposes.
The performance of each asset class is represented by certain Exchange Traded Funds and Passive Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at last UK market close before the end of the calendar month. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.