Key Takeaways
- The decline in energy prices reinforced our view that recent inflation pressures remain cyclical rather than structural, supporting a constructive medium-term outlook for fixed income.
- Market leadership broadened beyond the largest technology companies during June, highlighting that attractive investment opportunities continue to emerge across healthcare, industrials, financials and consumer sectors.
- Short-term market narratives often change faster than long-term fundamentals. Maintaining a disciplined investment process remains more important than reacting to individual headlines.
Market leadership rotated away from technology
June 2026 was defined by a broad rotation in global equities as investors reduced exposure to high-growth technology names and moved toward more traditional value and defensive sectors. The Dow Jones Industrial Average rose 2.52%, supported by demand for defensive exposure, while the tech-heavy Nasdaq Composite fell 2.81%. The S&P 500 declined 1.06%, reflecting a market still balancing earnings resilience against macroeconomic uncertainty.
The most notable market event of the month came from South Korea. On June 23, the KOSPI Index plunged nearly 10% in a single session. The rout primarily driven by unwinding off margin trading on several AI and technology companies including Samsung electronics and SK Hynix. Selling pressure intensified on June 25, when a major antitrust lawsuit was filed in the US alleging that Samsung, SK Hynix, and Micron coordinated restrictions on DRAM supply, contributing to a reported 700% increase in consumer prices over four years.
The month also saw the landmark public listing of SpaceX at an estimated valuation of US$1.75 trillion. Although some investors feared that an offering of this scale could divert liquidity from global equities, the broader market impact was limited. SpaceX shares initially rose to US$211.39 on June 12 before retreating to US$123.99 on July 17, which is below the offer price US$135. The episode reinforced a familiar investment lesson:
“Don’t make investment decisions based on speculative headlines. This could easily backfire your investment strategy over the long-term.”
Geopolitical developments also continued to reshape commodity markets. Progress on the US-Iran ceasefire, brokered by Pakistan and advancing since April 8, helped normalize shipping activity through the Strait of Hormuz. As supply risks receded, West Texas Intermediate crude fell 19.83% in June, while precious metals also came under pressure as safe-haven demand moderated. However, the ceasefire effectively ends on July 8, 2026. Since then, both nations have resumed military strike, and we expect this continue to serve the major market volatility in many months to come.
Fixed income markets were comparatively calm. The US 10-year Treasury yield slipped by 31 basis point to 4.422%, suggesting that investors remained unconvinced that the economy was entering a structurally high-inflation era. In currency markets, the US dollar strengthened against most major currencies, including the Malaysian ringgit (MYR). The US dollar gained 2.33% against the ringgit in June, turning its year-to-date performance positive at 0.56%. For investors with US asset exposure, currency appreciation provided an additional boost to overall returns.
Diversification helped protect portfolio performance
Performance of Major Non-Technology Stocks in June 2026
**Past performance is not an indication of future performance.
June was a challenging month for investors heavily exposed to mega-cap technology stocks. Five of the Magnificent Seven ended the month in negative territory, with Nvidia declining 11.9% and Microsoft falling 16.6%. Despite this weakness, MYTHEO portfolios remained relatively resilient. The pullback in mega-cap technology stocks was largely offset by stronger performance across Healthcare, Consumer Staples, Industrials, and Financials
Strength Beyond Technology: Top-Performing Stocks in June
**Past performance is not an indication of future performance.
A Diversified Exposure to Resilient Sectors Support Portfolio Performance
Healthcare was the standout sector in June, with several key holdings delivering strong returns. AbbVie rose 17.91%, while Eli Lilly gained 10.12% as investors continued to favour defensive and earnings-resilient businesses. Industrials also contributed positively, with GE Aerospace advancing 15.51% and Caterpillar climbing 14.57% on expectations that global demand for infrastructure and capital equipment will remain resilient despite ongoing economic uncertainty.
Financial and consumer-oriented holdings also attracted strong investor interest. Bank of America, JPMorgan Chase, Johnson & Johnson, and Home Depot each posted gains of more than 10% during the month. MYTHEO's exposure to these sectors helped offset weakness in several major technology positions. The month once again demonstrated the benefit of maintaining diversified exposure across multiple sectors, allowing the portfolio to adapt to changing market leadership and varying investment themes.
Fixed Income Remains Attractive Despite Short-Term Inflation Concerns
Inflation remained a key concern after the US reported higher-than-expected readings in April and May 2026. However, June provided some relief, with consumer prices rising 3.5%, below market expectations of 3.8%, as energy prices eased. In our view, recent inflation movements are more closely tied to fluctuations in crude oil prices rather than signs of an overheating economy.
This distinction is important for bond investors because it suggests that current inflationary pressures are cyclical rather than structural. While energy market volatility and geopolitical developments may continue to create short-term uncertainty, we believe inflation is unlikely to enter a sustained upward cycle like previous periods of persistent inflation.
US 10-Year Yields Stabilize After the 2023 Peak
Recent movements in US Treasury yields support this view. The US 10-year Treasury yield has largely traded within a range since reaching a peak of 4.99% in October 2023, despite several inflation-related concerns, including global tariffs in 2025 and disruptions to shipping activity through the Strait of Hormuz earlier this year. This suggests that investors view current inflationary pressures as manageable and temporary rather than a long-term threat to price stability.
As a result, fixed income is once again offering a more balanced risk-reward profile after several challenging years. US Treasury yields remain near their highest levels in more than a decade, providing investors with a significantly stronger income cushion than was available during the ultra-low-interest-rate environment. Although markets have pushed back expectations for interest rate cuts, they are not currently pricing in a return to the aggressive tightening cycle that contributed to significant bond market losses between 2020 and 2023.
If inflation continues to moderate and bond yields gradually normalize over time, fixed income investors could benefit from both attractive income levels today and potential capital appreciation in the years ahead.
Conclusion
Despite all the market hype surrounding AI and technology, investment opportunities often extend well beyond a single sector. MYTHEO's exposure across multiple sectors helped offset weakness in mega-cap technology stocks, demonstrating the importance of looking beyond the market's most popular themes. At the same time, moderating inflation and stable bond yields continue to support the long-term outlook for fixed income. While geopolitical risks and commodity price volatility remain important factors to monitor, we believe investors who stay focused on a disciplined long-term strategy will be better positioned to navigate changing market conditions and achieve their financial goals.
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This material is subject to MYTHEO’s Notice and Disclaimer.
