In the USA, France, and UK, political transitions are expected following imminent elections. These “lame duck” periods can create uncertainty in markets as outgoing leaders finalise their terms. While investors closely monitor policy decisions during this time, trade agreements and regulatory changes tend to be held-up so the focus shifts to future in-bound policy particularly any strategy changes including fiscal stimulus plans. Meanwhile monetary policy remains critical to market returns. Central banks are grappling with sticky inflation rates which impact their policy decisions. The Federal Reserve’s (Fed) dot plots continue to suggest rate cuts in the US though this is partially offset by a lower level of quantitative tightening.

Overall, earnings delivery during the first half of the year has exceeded expectations, supporting equity markets. The Bloomberg World Index gained 2.2% during the month of June, while the Ashburton Global Equity Growth Fund (I Class USD) gained 0.1%.

The biggest gainers held during the month were CrowdStrike (22.2%), Nvidia (12.7%) and Expedia (11.6%). In contrast to much of the rest of the software security names, CrowdStrike reported positive results during the month, raised their forecasts and the company will be added to the S&P 500 Index. While Nvidia’s ten-for-one stock split has no economic benefit, as anticipated, it generated substantial retail interest in the company. The Expedia share price has been volatile but continues to trade higher than our initial purchase price. Having pulled back in recent months following a change in CEO and some slightly less optimistic forward guidance last month, we are seeing the beginnings of a recovery. Expedia shares trade at an excessive discount to rival Booking Holdings, in our view. The worst performers held during the month were PureTech (-22.4%), Enphase (-22.0%) and Wise (-17.0%). The PureTech share price move was a little overstated given the sale at a large premium of 18% of shares in a share buyback. Wise management lowered their underlying long run growth guidance for the firm to 15% - 20%. We remain confident in the barrier to entry the company has and the potential of their Swift partnership. For Enphase, although there was no specific news on the company itself, it’s expected that the recovery in the residential solar market will take longer than previously expected due to high interest rates. However, we believe that residential solar and batteries will remain a crucial element of the energy transition and energy security, and Enphase is a high-quality stock to gain exposure to this trend.

With few obvious near-term catalysts, trading activity was elevated. All remaining PureTech shares were sold, along with the impending takeover target L’Occitane International. Proceeds were used to buy more Puig Brands. The Nvidia position was trimmed, and top-ups were made in Ambarella and Wise.

Weaker consumer spending and moderating growth hint at potential headwinds to come. While “lame ducks” prepare to hand over their responsibilities, markets anticipate smoother transitions.

Disclaimer:

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