Forget sell in May. So far the theme of 2015 has been sell on December 31, 2014 and go away because, as of June 30, the S&P closed essentially unchanged for the year.
Not so for other markets and asset classes and markets.
So which were the best and worst performing assets in the first half of 2015? As luck would have it, in this massively volatile global "market" (except for the ongoing artificialy calm of the S&P 500) where everything is now controlled by central bankers, the best performing asset/market in the first half of the year was also June's worst performer, and unless the PBOC can halt the bursting of the Chinese stock bubble, the best asset class of 2015 will hardly be that at the end of the year. Considering China's success at halting that other bursting bubble, housing, we are not very optimistic.
Gere is a quick summary of the top and bottom performers in both June and the first half, courtesy of Deutsche Bank:
Uncertainty over Greece meant that June proved to be a negative month for a broad range of asset classes with negative total returns seen across key equity, credit, and rates benchmarks. Performances were clearly weighed by the Greek referendum announcement only two trading days before month-end. Indeed key US and European equity indices were either up or just about breaking even right before the 'Greece referendum weekend'.
All in all total returns for the Stoxx600, DAX, IBEX, FTSEMIB, and the S&P 500 were down anywhere between 1.9% to 4.4% in June with the month also proving to be the worst month for European equities this year. Staying on equities, the sharp sell-off in Chinese equities was clearly the other notable market move we saw in June. The Shanghai Composite finished the month around 7% lower (total return basis) on supposedly margin call/valuation concerns. This marks the worst monthly performance for Shanghai Composite since June 2013 and also makes it the worst performer in June even though the Chinese stock market remains the best performing asset on a YTD basis (+33%). The last day of the month saw a c.11% range, ending up 5.5% higher reducing the monthly loss.
Elsewhere, most European equities are still sitting on double-digit gains this year (in EUR terms) although on a USD basis these are partly offset by the EUR weakness. The total return for S&P 500 was down -1.9% in June but despite being lower in price YTD, including dividends the total return is +1.2% in 2015 so far.
Moving on to fixed income, core rates on both sides of the Atlantic had a rather challenging time in June. Total returns for Treasuries and Bunds indices were down 1%-2% on the month even with the sharp rally following the Greek referendum weekend. The weakness in core rates was clearly a drag for Credit returns. Both EUR and USD IG credits were down around 2% on a total return basis with spreads also generally finishing the month wider across the board. The Greek headlines clearly did not help with all things peripheral with BTPs and Spanish bonds down around 2.5% in June.
On a YTD basis, total returns for most European rates and credit indices are generally 1-2% lower whereas US equivalents are fairing moderately better. As we approach the half year mark, it is fair to say that equities generally are having a much better year than fixed income so far given their relative performances.
Before we wrap up, it is worth noting that Wheat (+22%) and Corn (+9.0%) have had a fantastic month in June which helped them retrace bulk of the YTD losses. Weather related factors were apparently the main drivers behind the performance in these soft commodities. Elsewhere both Brent and WTI finished the month lower despite the weakness in the Dollar.
The full MTD and YTD charts and tables are below.