TWD Monthly Market Update – June 2026
Broader Market Moves1
Macro Commentary
Despite ongoing concerns surrounding inflation, interest rates and Middle East tensions, financial markets delivered positive returns during May as investor sentiment improved through the second half of the month. The S&P/ASX 200 rose 1.15% while the S&P 500 gained 5.26. Within Australia, Materials was the standout sector, benefiting from stronger commodity prices and renewed investor appetite for resource exposures, while Consumer Discretionary, A-REITs and Industrials also generated positive returns. In contrast, Healthcare, Utilities and Energy were among the weakest-performing sectors, while Financials also underperformed the broader market. Weakness in Healthcare was driven in part by a sharp decline in CSL following a downgrade to earnings guidance and the announcement of significant impairment charges, which weighed heavily on broader sector performance.
Domestic economic developments were a key focus during the month. The Reserve Bank of Australia increased the cash rate by 25 basis points to 4.35% at its meeting on 5 May, citing ongoing inflation risks and maintaining a data-dependent approach to future policy decisions. Business conditions improved modestly, with S&P Global PMI data indicating both Manufacturing PMI (51.0) and Services PMI (50.3) returned to expansionary territory. However, labour market conditions softened later in the month. Data released by the Australian Bureau of Statistics on 21 May showed employment declined by 18,600 positions while the unemployment rate increased to 4.5%, suggesting labour market momentum is beginning to moderate after an extended period of resilience.
The Australian Federal Budget released on 12 May was framed around cost-of-living relief, energy security, intergenerational equity and improving the longer-term fiscal position. Key measures included a new Working Australians Tax Offset, a simplified work-related tax deduction, additional healthcare and energy support measures, and further investment in fuel and fertiliser security. The Budget also proposed significant tax reforms relating to capital gains tax, negative gearing and discretionary trusts. Early reactions from investors, economists and business groups were mixed, while the proposed measures remain subject to parliamentary approval before becoming law.
International markets remained resilient despite a challenging macroeconomic backdrop. Strong earnings from large-cap technology companies and continued investment associated with artificial intelligence infrastructure supported equity markets throughout the month. A key highlight was Nvidia’s quarterly earnings result, which reported record revenue of USD 81.6 billion, an increase of 85% from the prior year, while Data Center revenue rose 92% to USD 75.2 billion. The result reinforced investor confidence in the ongoing AI investment cycle and helped support sentiment across global technology stocks.
Inflation remained a central market theme throughout May. Consumer price data released by the US Bureau of Labor Statistics on 12 May showed headline inflation accelerated to 3.8% year-on-year, up from 3.3% previously, while core inflation remained elevated at 2.8%. Higher energy prices were a significant contributor, reflecting the impact of ongoing geopolitical tensions and concerns surrounding global oil supply. The stronger-than-expected inflation outcome reinforced expectations that the US Federal Reserve may need to maintain a restrictive monetary policy stance for longer than previously anticipated.
US labour market conditions remained relatively resilient despite signs of gradual moderation. April non-farm payrolls showed employment increased by 115,000 positions while the unemployment rate remained steady at 4.3%. Although hiring momentum has slowed from the stronger pace seen through much of 2025, overall employment conditions remain supportive of continued economic expansion.
Commodity markets remained highly volatile throughout May. Gold prices briefly approached USD 4,800 per ounce during the month as safe-haven demand increased amid heightened geopolitical uncertainty before retracing toward month-end as bond yields and the US dollar strengthened. Despite this pullback, gold still finished May modestly higher, gaining approximately 0.84% over the month and ending near USD 4,542 per ounce. Oil prices experienced even larger swings, with Brent crude briefly rising above USD 113 per barrel as concerns surrounding potential disruptions to Middle East energy supplies intensified. However, prices retraced sharply through the second half of May, finishing the month near USD 92.66 per barrel as market concerns eased and investors increasingly priced the possibility of a negotiated outcome that could reduce the risk of a prolonged supply disruption. These developments contributed to a substantial unwinding of the geopolitical risk premium that had built into energy markets earlier in the month and helped support a broader recovery in investor sentiment toward month-end.
Looking ahead, investors continue to navigate a complex environment characterised by moderating economic growth, persistent inflation pressures and elevated geopolitical risks. While economic activity remains relatively resilient, the outlook for interest rates will remain heavily influenced by inflation outcomes, bond yields and developments in energy markets. Although fears of an extended disruption to Middle East energy supplies eased through May, negotiations remain ongoing and uncertainty surrounding the final outcome continues to present a source of risk for global markets. Against this backdrop, maintaining diversified portfolio exposures and focusing on high-quality businesses remains important as markets continue to adjust to a higher-volatility environment.
1ASX 200 refers to SPDR S&P ASX 200 Fund (STW), S&P 500 refers to iShares S&P 500 (AUD Hedged) ETF, MSCI World refers to Vanguard MSCI Index International Shares (Hedged) ETF, NASDAQ 100 refers Nasdaq 100 Currency Hedged ETF, AU Comp refers to the Vanguard Australian Fixed Interest Index ETF, Global Agg refers to Vanguard Global Aggregate Bond Index (Hedged) ETF, Gold (USD) refers to the LSEG Gold Spot Price (USD)
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