☰ Market Snapshot: Risk-Off

Research Notes For 16 to 20 June > https://www.unum.capital/post/r1620june

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As of Thursday, 19 June at 13h45

Overall Assessment: Strongly Risk-Off

A review of key financial market indicators reveals a clear and widespread "risk-off" sentiment among investors. The prevailing mood is one of caution, characterized by a flight from growth-sensitive assets and a move towards traditional safe havens.

Key Market Observations:

• Global Equities Under Pressure: Major stock indices across the US, Europe, and South Africa are experiencing a synchronized sell-off. Declines in the S&P 500 (-0.56%), NASDAQ 100 (-0.68%), and Germany's GER30 (-0.65%) indicate a broad-based retreat from equities.

• Flight to the US Dollar: The foreign exchange market is marked by a strong US dollar. The dollar has appreciated against a basket of currencies, most notably risk-sensitive ones such as the Australian Dollar (-0.75%) and South African Rand (+0.50%). This signals a move by investors to the perceived safety of the world's primary reserve currency.

• Commodities Signal Economic Concern: Commodity market performance reinforces the risk-off narrative.

  • Industrial Metals: Copper (-0.81%), Platinum (-2.15%), and Silver (-0.99%) are all down, suggesting market concern over future industrial demand and global economic growth.

  • Safe Havens: Traditional safe-haven Gold is trading modestly higher (+0.16%).

  • Energy Outlier: UK Oil is a notable exception, with a gain of 1.67%. This is likely driven by specific supply-side factors rather than broad market sentiment.

Conclusion:

The weight of the evidence from equity, currency, and commodity markets points to a prevailing pessimistic outlook. Investors are actively reducing their exposure to risk and positioning themselves more defensively due to concerns about future economic performance.

Lester Davids

Senior Investment Analyst: Unum Capital