Key quarterly themes
Equities recover and bonds continue to perform well
The Fed ceases its monetary tightening cycle and indicates that it will discontinue its balance-sheet reduction in September
Growing optimism around a US-China trade deal helps markets
The MSCI AC World equity benchmark rose 12.4% (14.4% in euro terms).
US stocks rose 13.9% (16.0% in euro terms), following the policy reversal by the Fed and easing recessionary fears.
Europe ex-UK equities rose 12.6% (12.7% in euro terms), similarly benefiting from the more dovish policy stance adopted by the ECB and growing hopes of a rebound in Chinese growth.
Japanese markets lagged, rising 7.8% (8.8% in euro terms) as economic data disappointed, while there were lingering concerns over the potential impact of the planned VAT increase scheduled for October.
The UK also underperformed, rising 9.4% (13.9% in euro terms) due to the ongoing Brexit-related uncertainty.
The ICE BofA Merrill Lynch Eurozone > 5-year sovereign bond benchmark rose 3.8% during the quarter.
The German 10-year yield fell back into negative territory, ending the quarter at -0.07%, as the ECB pushed out guidance in relation to the expected timing of the next interest-rate rise.
Italian 10-year spreads against Germany ended the period slightly higher at 256 basis points (bps). Spanish 10-year spreads were effectively flat at 117bps, while Portuguese spreads narrowed to 132bps at quarter-end.
The euro generally drifted lower throughout the quarter, ending the period at 1.1218 against the US dollar.
Commodities rose 15.0% (17.0% in euro terms). West Texas Intermediate (WTI) oil rose 32.4%, as OPEC began to implement new production cuts announced at the end of 2018, tensions in Venezuela restricted oil supplies and production disruptions were evident across other regions.