Just as we had identified a calming of the U.S.-initiated trade conflict in our previous market commentary, the U.S. President once again signaled potential tariff measures at the beginning of the month – and followed up with additional threats of this kind over the course of June. As in the past, it remains unclear how any potential implementation would be structured in concrete terms. Nevertheless, freight rates have risen to their highest level since April 2025. The main drivers are frontloading of shipments out of caution over potential tariff increases, as well as efforts to preempt possible bottlenecks and rising fuel costs in the wake of the current Middle East crisis. Meanwhile, Brent crude oil prices have fallen back to levels seen prior to the Iran conflict, as market participants increasingly expect normalization of the situation and anticipate a short-term oversupply. Despite recent tensions, which temporarily disrupted significant oil volumes in the Gulf, rising tanker movements indicate an easing of the supply situation. This is also likely in line with the Fed Chair Kevin Warsh. At his first meeting as Chairman of the U.S. Federal Reserve, he reaffirmed his intention to resolutely combat still-elevated inflation, contributing to a noticeable easing of inflation expectations. In addition to declining oil prices, this is also attributed to a more restrictive monetary policy stance, which reduces concerns that Warsh might yield to political pressure. Against this backdrop, further interest rate decisions by the European Central Bank over the course of the year are also likely to be closely watched.
Focusing too intensely on geopolitical developments and deriving investment decisions from them in the first half of 2026 would have proven of limited value – this is also the conclusion of a Financial Times analysis. Toward the end of the first quarter, little indicated such a development – yet in the following quarter, U.S. equities performed exceptionally strongly, even though they were among the weaker markets again in June. Despite still-elevated valuations, a significant portion of the price gains is attributable to rising analyst estimates and earnings. Based on expected price-to-earnings ratios, U.S. equities now even appear cheaper than at the beginning of the year. However, upward revisions are highly concentrated in just a few companies: around two-thirds of total earnings growth is attributable to only ten firms. Notably, these very companies have not consistently outperformed disproportionately in equity markets. This suggests that the narrative of a broadly supported, earnings-driven rally tells only part of the story – and that the underlying market dynamics are more complex than aggregate earnings expectations imply. Developments point to a potential shift in leadership within the technology sector: instead of software and internet companies, providers of AI infrastructure are increasingly coming into focus. Whether this trend will prove sustainable remains to be seen – as do the implications for planned IPOs such as those of OpenAI and Anthropic.
The U.S. labor market remains robust, fueling concerns of overheating rather than recession and increasing pressure on the Federal Reserve to maintain a restrictive stance. In Europe, however, the decline in oil prices – if it proves sustainable – could for the first time in months have a dampening effect on inflation and thus influence the ECB’s monetary policy outlook, even though core inflation remains elevated. Another notable development during the reporting month was the following: shortly after its IPO, SpaceX announced the issuance of new bonds totaling USD 25 billion. Some of these came under pressure shortly after placement due to growing doubts about the company’s long-term stability and creditworthiness. As a result, the bonds are trading with significantly widened spreads despite holding an investment-grade rating – levels more typical of issuers in the speculative segment. We view this development as a constructive signal: while equity investors tend to focus more on ambitious future scenarios, bond investors play the role of enforcing financial discipline in terms of spending and leverage. Their return potential is limited to yield to maturity, whereas equity investors can benefit from long-term growth potential. In commodity markets, oil and precious metals were among the weaker segments. Gold came under pressure partly due to the Fed’s surprisingly restrictive stance, while easing tensions in talks between the U.S. and Iran weighed on oil prices.
Since early March, the Strait of Hormuz had been largely closed and has now partially reopened – yet only a fraction of ships are currently passing through compared to pre-crisis levels. Meanwhile, oil prices have returned to levels seen before the outbreak of the conflict. In the short term, this development can be explained by factors such as temporary oversupply and the rerouting of trade flows. Other factors – such as damaged production capacity or the replenishment of strategic reserves – are likely to have an impact only with a delay. Whether and to what extent these longer-term effects will materialize depends on a range of additional factors. In equity markets, we are currently overweight Switzerland. The key drivers are the combination of high quality, defensive positioning, and comparatively attractive valuation. We address elevated valuations in the U.S. and parts of Europe with partial hedges in the form of put options. We used the recent pullback in large U.S. technology stocks to acquire a high-quality name at an attractive valuation and build a corresponding position. Overall, we continue to emphasize balanced diversification and maintain an overweight position in real assets.