Global Markets Between Meetings

On the face of it, June had all the ingredients of a difficult month: technology stock volatility, a new chairman took the helm at the Federal Reserve, the war in the Middle East came to a fragile end, and a British Prime Minister resigned. The market response, however, told a different story. The S&P 500 slipped only 1.3%, a modest pullback that followed gains of more than 10% in April and 5% in May and rounded off the index’s strongest quarter in six years, with the S&P 500 and Nasdaq up roughly 15% and 21% respectively since the end of March. The FTSE 100 finished the month higher. If June demonstrated anything, it was how little of the headline drama translated into portfolio outcomes.

Much of the volatility centred on the AI theme. The sharpest single move came on 5 June, when US employment data came in well ahead of expectations, dashing hopes of rate cuts and sending the Nasdaq down 4.18% in one session, its worst day since 2025, with chipmakers alone shedding an estimated 1.3 trillion dollars of value. Beneath the index level, though, the more telling development was a growing split within global technology. The Magnificent Seven lost roughly $2.3 trillion of combined market value over the month, with Microsoft the hardest hit, falling around 17% in its weakest month since 2000, while Amazon lost roughly 12%, Meta 11%, and Apple fell more than 10% from the record high it set early in the month, as investors questioned how quickly the enormous sums being committed to AI infrastructure will translate into earnings. The companies supplying that buildout fared very differently. Chipmakers and memory manufacturers extended their rally on the back of component shortages and extraordinary price rises, with DRAM prices up as much as 98% over the first quarter and Applied Materials, the standout, gaining more than 60% in June alone. Those writing the cheques struggled, those cashing them prospered.

The war with Iran, meanwhile, slipped from the market’s attention with surprising speed. An agreement signed in mid-June brought nearly four months of conflict to a close and reopened the Strait of Hormuz, prompting a sharp fall in the oil price. Brent, which had traded well above $100 a barrel in May having risen more than 50% during the conflict, retreated to below $79. Within days, investors had returned their focus to the AI trade.

June also brought a changing of the guard at the Federal Reserve, with Kevin Warsh chairing his first policy meeting mid-month. Rates were held but the committee’s projections flipped from a cut to a possible rise by year end, against a backdrop of US inflation reaching 4.2% in May, its highest in three years, and Warsh abandoned the forward guidance the Fed has traditionally offered on the likely path of policy. The reaction was unambiguously hawkish; two-year Treasury yields jumped 16 basis points to 4.21%, their highest in over a year, the dollar climbed to a thirteen-month high, and gold extended its recent retreat. At around $4,150 an ounce, the metal now sits well below the record it set in January of over $5,500.

At home, the month saw upheaval in Westminster. Keir Starmer stepped down as Prime Minister, with Andy Burnham, newly returned to Parliament through a by-election victory, the clear frontrunner to replace him. What matters for investors is that Burnham has committed to working within the existing spending and borrowing framework. The FTSE 100 was largely unmoved on the day of Starmer’s resignation and closed the month near 10,500, within reach of February’s record high, having risen 3% over the quarter to complete a sixth consecutive quarterly gain, its longest such run since 2022.

Taken together, June offered a great deal of news and only a modest market pullback, a useful illustration of why staying invested and properly diversified through noisy periods tends to be rewarded. Attention now turns to July’s earnings season, where the technology giants will need to show that their vast AI investment is starting to bear fruit.

Changes to Model Portfolios and Seven Rivers Funds

There were no changes to the portfolios this month. Our concern that inflation may yet prove more persistent has not diminished, and with US inflation at its highest level in three years and the Federal Reserve now signalling that its next move may be upwards, the inflation protection introduced earlier in the year stays firmly in place. Gold was a detractor over the period, having for the time being taken on a closer correlation with equity markets. We regard much of this weakness as profit taking following an exceptionally strong run, in which the metal remains up some 20% over twelve months even after its recent fall, and we expect its protective characteristics to return in due course.

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IC meeting date 29^th June 2026. The information and commentary contained in this document is based on views as at 6^th July 2026 and may be subject to change.