Commentary

June 2016 – ADIFO Global Market Review

by Kevin Burrows

BREXIT!

The shot heard around the world – BREXIT! – led to a massive selloff in stock markets on the day following the British vote to leave the EU. However, by the end of the month investors had already begun to separate equity market winners from the losers. The S&P 500 eked out a gain of 0.1% despite suffering a 2-day drawdown of almost 6% before recovering. The verdict? At about 4% of global GDP, the UK exit will have a negligible effect on the mighty American economy. The NIKKEI 225 fell –10%, as the Yen was the primary recipient of the flight-to-quality currency bid, gaining 6.8% against the Dollar and at the time of writing, up an amazing 17% against the Pound. Given the –5.7% fall in the DAX, one can be forgiven for thinking it was Germany that voted to leave. Indeed, the FTSE 100 index, filled with global companies earning hard currency revenues, gained 4.4% as the plunging Sterling made their foreign income streams that much more valuable. Emerging markets gained 3.3%, regaining its leadership position on a year-to-date basis from the S&P500.