June 2012: The Month in Charts

July 3rd, 2012 by Scott Barber

The first half of 2012 is over – and the risk on/risk off trade is still alive and well.

There’s nothing like a spot of volatility to keep investors on their toes.

June was marked by a continuation of the markets’ recent obsession with events in Europe, but with a greater dose of unpredictability, both in terms of the news flow and how investors chose to respond to it. For instance, one of the best-performing asset classes was Spanish equities, which benefitted first from some bottom-fishing when that country’s government finally requested bailout assistance for the country’s troubled banks. Spain’s stocks ended the year with a bang, rallying on the final trading day of the year when word came that eurozone political leaders had reached an agreement to funnel financial support to troubled banks without adding to sovereign debt loads.

Still, events in the eurozone continue to weigh on investors’ minds – and understandably so, as economists ratchet down growth forecasts worldwide and countries from the United States to China scramble to contain the damage. Political uncertainties may have moved to a back burner, with the election of a Greek coalition government in a second round of voting in mid-June, but they haven’t dissipated. Certainly, with the U.S. presidential and Congressional elections looming ever closer on the horizon, odds are that the question of economic growth – or the lack thereof – in the United States is likely to become a hot button issue.

The one constant? There seems no reason for the rapid switches in mood, from “risk on” to “risk off”, to stop dominating the market any time soon. The only difference may lie in what asset classes are viewed as being risky at any given time. Read on for a review of June’s ups and downs in the form of Datastream charts, many of which are likely to contain the seeds of issues that will shape market movements in the second half of 2012.