Investor anxiety intensifies as global equities fall 0.9% in June

Overview

This report tracks price performance across global equity markets, regions, countries, sectors, and investment themes. The core conclusion is that after a sharp rebound in global equities during April-May, markets saw a mild pullback in June as investors became more cautious about higher interest rates, the fragile US-Iran ceasefire, and the sustainability of certain AI sub-themes. However, healthy earnings growth forecasts and positive earnings revisions are still seen as supportive of equity market performance.

Core views

The market showed divergence in June: Europe posted positive returns, while the USA, Japan, Asia Pacific ex-Japan, and Emerging Markets weakened; semiconductors and banks continued to contribute positive returns at the sector level, while software and telecommunications were major drags; at the theme level, AI computing power remained resilient, but high-volatility growth themes saw sharp divergence. Overall, the report is not a single-stock recommendation but provides investors with observations on global market performance, contribution, and seasonality.

Analysis framework

The report uses a monthly quantitative monitoring framework to compare the price returns of MSCI world, regional, country, sector, and thematic indices across different periods, and combines constituent stock and sector weights to calculate contributions to MSCI AC World performance.

Methodology notes

• Quantitative Performance TrackingGlobal Performance Monitoring

  Price return and contribution analysis

  The report uses month-end prices and market-cap-weighted performance calculations, covering 1-month, 3-month, 6-month, 12-month, and year-to-date periods, and shows the contribution of stocks, country-sector combinations, and themes to global index performance.

• Index and Sector ClassificationMSCI and Extended GICS Sector Framework

  Global country, region, and 16-sector performance matrix

  Countries are based on MSCI definitions, while sectors are broadly based on GICS; the report further splits the three largest sectors by market cap, expanding the 11 GICS sectors into 16 sectors.

• Seasonality Analysis1988-2025 Historical Seasonality Statistics

  Average performance by month and quarter across regions and sectors

  Based on historical data from 1988 to 2025, the report compares the seasonal performance of global regions and sectors to help identify potential timing windows, but this does not guarantee future returns.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MSCI AC World Index

  Global equity benchmark index

  Strengths

  Earnings growth forecasts and positive earnings revisions continue to provide support, following the strong rebound in April-May.

  Weaknesses

  It fell 0.9% in June, with rising sensitivity to interest rates, geopolitics, and the sustainability of AI themes.

  Comparison

  Europe outperformed the USA, Japan, Asia Pacific ex-Japan, and Emerging Markets in June.

  Risks

  Rising interest rates, geopolitical conflict, weaker earnings revisions, and pullbacks in high-valuation themes.

• Semiconductor Sector

  Leading sector in June and an important source of positive contribution

  Strengths

  Sector return was about +4.8% in June, with USA Semis making a prominent contribution to ACWI performance.

  Weaknesses

  Highly correlated with AI capex and growth-stock sentiment, so volatility may be amplified.

  Comparison

  Outperformed lagging sectors such as software and telecommunications.

  Risks

  Cooling AI demand expectations, valuation compression, and concentration risk in leading stocks.

• AI Computing Power, Photonics, and Data Center Themes

  Strong AI infrastructure themes year-to-date

  Strengths

  Year-to-date, photonics, AI computing power, and data centers are up 141%, 107%, and 80%, respectively.

  Weaknesses

  Investors are beginning to worry about the sustainability of some AI sub-themes, and divergence within the theme is widening.

  Comparison

  AI computing power still posted positive returns in June, but some related large-cap tech stocks made negative contributions to the index.

  Risks

  Theme crowding, weaker-than-expected earnings delivery, and changes in the capex cycle.

• PROSHARES ULTRA SEMICONDUCTORS (USD.US)

  A high-beta asset indirectly linked to the semiconductor theme

  Strengths

  The report shows semiconductors were one of the leading global sectors in June, and related themes were relatively strong in the short term.

  Weaknesses

  The report does not directly provide a rating or target price for this ETF, and leveraged products may amplify volatility.

  Comparison

  The semiconductor sector outperformed most global sectors, but contribution dispersion across different semiconductor stocks remained significant.

  Risks

  Leverage decay, sector pullbacks, cooling AI themes, and rising market volatility.

Key data

• MSCI AC World June Performance-0.9%After a cumulative gain of 15.5% in April-May, it saw a mild pullback in June.
• June Regional PerformanceEurope +0.8%; Japan -0.4%; USA -1.0%; Asia Pacific ex-Japan and Emerging Markets -1.7%Europe was relatively strong, while the USA, Japan, and emerging markets weakened.
• Leading Sectors in JuneBanks +4.8%; Semiconductors +4.8%; Healthcare +4.7%Semiconductors and banks made important positive contributions to global market performance.
• Lagging Sectors in JuneSoftware -14.2%; Telecommunications -9.6%Growth and communication-related sectors were the main drags.
• Leading Themes in JunePrecision Medicine +8.5%; AI Computing Power +2.9%AI-related themes remained differentiated, with AI computing power relatively maintaining positive returns.
• Lagging Themes in JuneSpace -31.2%; Energy Storage -16.0%High-volatility themes saw significant pullbacks.
• Leading Themes Year-to-DatePhotonics +141%; AI Computing Power +107%; Data Centers +80%AI infrastructure-related themes remain the main winners year-to-date.
• Main Positive-Contribution StocksApplied Materials、Micron Tech、Lam ResearchThese stocks made larger contributions to MSCI AC World performance in June.
• Main Negative-Contribution StocksMicrosoft、Apple、BroadcomThese stocks were larger drags on MSCI AC World performance in June.

Impact & implications

The report implies that global equity markets have not entered a one-way deterioration in risk appetite, but rather a phase that places greater emphasis on earnings delivery, theme crowding, and macro uncertainty. For portfolios, the relative strength of semiconductors, banks, and healthcare is worth tracking, but the sustainability of AI-related sub-themes and the pullback risk in high-volatility themes require stricter management.

Risks

• Higher interest rates may weigh on valuations and weaken growth-stock performance.
• The fragility of the US-Iran ceasefire brings geopolitical uncertainty.
• The sustainability of some AI sub-themes is being questioned by investors, which may trigger theme rotation or pullbacks.
• High-volatility themes such as space and energy storage fell sharply in June, highlighting elevated volatility risk in thematic investing.
• The report's performance calculations do not include dividends, transaction costs, taxes, or investment advisory fees, and should not be treated as actual investable returns.

What to watch

• Whether earnings growth forecasts and earnings revisions continue to remain positive.
• The impact of the interest-rate path and geopolitical events on global risk appetite.
• Whether semiconductors, AI computing power, photonics, and data center themes can sustain their relative strength.
• Whether lagging segments such as software, telecommunications, space, and energy storage will rebound or continue to weigh on performance.
• Whether regional rotation will spread from Europe to the USA, Japan, and emerging markets.
• Seasonality statistics show that average equity returns are better in the fourth quarter, but this needs to be validated against the current macro and earnings environment.