The ascent of global equities continued in June. The MSCI All-Country World Equity index chalked up its seventh positive month out of the last eight, recording a monthly gain of over 2% (in USD), and pushing the year-to-date gain to more than 15%. Several forces propel this upward momentum: strong corporate earnings (especially the “Magnificent Seven” in the US), ebbing inflation, and the anticipated productivity improvements by artificial intelligence (AI). The United States equities continue to dominate globally, as the broad market index S&P500 registered its third straight positive quarter, and is now up over 30% since its lows last autumn. In contrast, stock markets in Europe did not have a good June (but still delivered a positive quarter) as inflation in the Eurozone continued to remain well above the European Central Bank’s (ECB) 2% target.  Still, the biggest news for the month was that, despite the stubbornly high inflation, ECB persisted with the first cut for this interest rate cycle. Asian markets also had a strong month but lagged behind the United States; China, however, had a negative June, as the troubled real estate sector continues to weigh on the consumer spending and investors’ sentiment, despite government stimulus efforts. Global bonds continued to disappoint, as their return since the beginning of the year has been meager. Having been driven by news about softening labor market and encouraging news on inflation, the bond market was suppressed by rekindled political risks. Announcements of snap parliamentary elections in France, for example, pushed German bund yields up, while the prospects of UK elections were less impactful. Renewed concerns about inflation on both sides of the Atlantic caused investors to reassess the timing of interest rate cuts, and bonds swooned. So, fixed income investors had to endure another quarter of negative returns – global investment grade bonds delivered negative returns of -1.1%. 
   June brought positive results for the American shares. The tech-heavy index NASDAQ clearly outperformed its peers with nearly 6% gain for the month, while the broad S&P500 advanced 3,5%, and the industrial Dow Jones “lagged” with a rise of 1,1%. However, these returns were not evenly distributed, as companies exposed to AI continued to outperform other areas of the market. This has produced some lopsided results across the U.S. equity markets, and returns have been heavily concentrated within a handful of companies: as of mid-year a single IT stock (Nvidia, +149% year-to-date) contributed around 30% of the overall total return of the S&P500; moreover, the top 10 stocks accounted for over 3/4 of the index’s total return in the first half of 2024! This has created such a bifurcation that the average US stock now underperforms the broad market return by nearly 10% YTD – this wide disparity has not been seen in over 35 years. A surprising consequence of the enthusiastic buying of all AI-related companies is the solid run of Utilities stocks during the past quarter due to the high electricity demand – cloud-computing data centers require a lot of electricity (Utilities were the worst performing sector of all in 2023). Three sectors — technology, consumer discretionary and (tele)communication services — now make up over 50% of the entire market capitalization of S&P500, and they were the top-performing sectors in June. Technology alone was up nearly 10%, continuing the market momentum this year so far. Consumer Staples, Real Estate and Materials were among the biggest laggards. Overall, the expanding US economy started showing first signs of weakening. Q1 GDP growth was revised lower from 0.4% to 0.3% mainly due to lower consumer spending. Consumers are loosing their confidence and – with the unemployment rate increasing – the labor market is gradually becoming less tight. Data showed US inflation cooling: headline inflation (CPI) declined more than expected to 3.3% last month, while core inflation (excluding the volatile food and energy prices) reached 3.4%. Within the core components, core goods prices were unchanged, as well as the core services prices, with the exception of shelter expenses (which remain sticky but falling).  Furthermore, the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures Index, fell to an annual growth rate of 2,6%, which was the slowest price growth in more than three years. Although the yields of US treasuries did not change much during the course of the quarter, they were the only major sovereign market to deliver positive returns with 0,1% gain. In June the yield of the benchmark 10-year note continued to gradually fall to 4,36% (from 4,50%). The yield curve remained inverted. 
    Equities in Europe did not have a good month (but delivered a positive quarter). The pan-European STOXX600 index shed 1,3% of its value in June, as the continent continued to grapple with high inflation and political turmoil. The unexpected outcome of the European parliamentary election (resurgence of nationalistic parties) triggered President Macron to call a snap election in France. Investors were concerned about the possible outcome (a win for the anti-immigrant, and anti-European far right) and this caused significant volatility – the French Equity market fell by 6,4% in June, hurting broader European returns. Stocks on the old continent delivered just 0,6% return over this year’s second quarter vs. 3,9% for S&P500. The Euro area’s economy is slowly recovering as confidence indicators are improving and net exports are booming. Data showed that Q1 GDP growth was relatively strong mainly thanks to the strong net exports. Producer confidence indicators are also improving, especially in the services sector, and consumer confidence is recovering, though savings rates on the continent still remain too high to help a faster recovery. The fight against inflation in the euro area is far from over, as prices keep climbing (contrary to the US, where inflation is falling). In May, headline inflation increased from 2.4% to 2.6%, as year-on-year energy inflation turned positive again while food inflation slightly declined. Core inflation also increased from 2.7% to 2.9%, mostly due to a big increase in services inflation. Goods inflation remains moderate. Wage pressures continue to drive inflation fears as labor shortages and low unemployment are prevalent. Despite the inflation news, the ECB cut its interest rate in June from 4% to 3.75% arguing that it needed to spur the economy. However, by raising its inflation expectations, ECB suggested that the pace of the rate cut cycle will be gradual and slow. With all the elections and the resurfaced political risks, European sovereign yields rose (meaning that their prices fell) and bond spreads widened. Thus, over the quarter, European government bonds delivered negative returns.
     June was not a good month for the companies on the Bulgarian Stock Exchange. The two indices, the flagship SOFIX and the broad BGBX40, ended with losses larger than 2%. In contrast, the small companies index, beamX, reported a great month, closing 6.4% higher. Despite this monthly result, the major BSE indices remain well-performing since the beginning of the year (for example, SOFIX is +10.8% at mid-year), while beamX has not advanced much (+1.5%). During the month, the traditional annual initiative "Equity Day" was held, which is organized by the BSE and the Central Depository. Trading on June 12th was free for all investors because the 25 participating investment brokers and banks did not charge commissions for their services – the accumulated turnover for the day was a record BGN 5.5 million. Another important news was the launch of the securities lending platform, which will allow short sales on the BSE. Thus, among Bulgarian companies, the best performer was the fast growing technological company Bianor Holding AD, whose price rose by nearly 16% in June, and the worst – the commercial and energy holding Synergon Holding AD, whose stock fell by more than 12%