June capped a volatile quarter with global equities rebounding strongly. Despite Trump’s tariff shock early in Q2, a 90-day delay and progress on trade deals drove both the S&P 500 and Nasdaq to record highs. The ECB cut rates to 2.0% as eurozone inflation returned to target, while the US dollar extended its worst start to a year since 1973. Geopolitical risks flared in the Middle East, but markets absorbed the shocks. Umbra MPS models were broadly in line or ahead of benchmarks, with currency headwinds a drag in GBP terms but long-term positioning intact.
Asset prices rose again in June, closing a turbulent quarter that began with Trump’s sweeping tariff regime sparking the sharpest five-day drop in the S&P 500 since March 2020. A subsequent 90-day delay on reciprocal tariffs and progress on trade deals triggered the fastest rebound from a 15%+ drawdown in history, propelling US indices to fresh all-time highs. The S&P 500 gained +5.1% in June and +10.9% in Q2, while the Nasdaq added +6.6% and +18%.
European equities were softer (MSCI Europe ex-UK –1.1% in June, +3.2% Q2), though they remain supported by ECB easing and capital rotation from the US. UK small and mid-caps showed renewed strength, underpinned by a surge in M&A activity, while China gained +15.3% over the quarter, driven by AI optimism and government backing. Sector trends were mixed: the “Magnificent 7” rebounded with +32% earnings growth, while healthcare and energy lagged.
The ECB cut its policy rate to 2.0%, marking the eighth reduction in its easing cycle. Inflation has fallen back to 2%, aided by lower energy costs and a stronger euro. In contrast, the US faces mounting fiscal risks. The “Big Beautiful Bill,” projected to add up to $5 trillion to deficits, stoked concerns over debt sustainability and weighed on the dollar. The USD has now fallen –10.8% against GBP year-to-date, its worst start since 1973, creating translation headwinds for UK investors.
Fixed income was constructive, with sovereign bonds advancing (Citigroup World Government Bond Index +1.9% in June, +4.6% Q2) despite fiscal worries. US Treasuries delivered modest gains (+0.8%), while European government bonds outperformed. Credit was buoyant: global high yield rose +2.3% in June and +4.9% in Q2, supported by solid fundamentals and limited issuance.
Alternatives were steadier. Gold was flat in June but up +5.2% for the quarter, continuing its strong run. Property and infrastructure also posted modest gains.
Umbra MPS portfolios delivered positive returns in June, largely in line with or modestly ahead of ARC benchmarks. While dollar weakness has been a headwind in GBP terms, Umbra remains confident currency effects balance out across cycles. Defensive and cautious portfolios rose around +1%, while higher-risk models delivered +2–3%. Long-term outperformance across 1, 3, and 5 years remains intact, reflecting Umbra’s disciplined and diversified approach.
