US market indices ended the first half of the year in negative territory. Investors' main concerns remain: the high inflation and the possibility of a recession as a result of more aggressive monetary tightening worldwide. Of course, inflation and Fed policy will remain the main topic for the rest of the year, but the more interesting thing this month will be the companies' second quarter earnings reports. Their publication will begin in the middle of this month and will provide additional information on the state of the economy. Focus on the reports will be extremely keen as many market participants believe that the impact of non-inflation has not yet been fully reflected in corporate earnings.
 

Victory for the defensive sectors

Utilities stocks are showing signs of improvement as investors turn to more defensive sectors. They hope that utilities will be able to more easily and efficiently pass on inflationary costs to end users. Outside of the energy sector, the traditional inflation havens are consumer staples and health care, which have actually outperformed the market despite their declines since the start of this year.

Bonds ended the week on a positive note

The Bloomberg Aggregate Bond Index performed positively for the second week in a row. The 10-year bond yield fell to 2.9% last week, giving a positive boost to bond prices. The index tracking high-yield corporate bonds failed to perform well and remains in red territory not just for the week, but for the year as well. Monetary policy has its negative impact on fixed income instruments, and investors prefer instruments with higher credit ratings.

Raw materials fell for the third week in a row

Natural gas prices fell again this past week. This June they had their worst month in at least three years. The inventory report showed a larger-than-expected build-up and raised concerns of a potential oversupply. Major metals such as gold, silver and copper ended last week also lower.

Consumer confidence in the US and the EU

USA

Tuesday's consumer confidence report hit a 16-month low. Consumers are pessimistic about the economy amid rising fuel and food prices. In addition to weaker consumer confidence in June, expectations for the economy fell to a 10-year low. The report shows that consumers are skeptical about the economy for the second half of the year.

The Eurozone

In June consumer confidence of Europeans fell to its lowest level since March 2021. Pessimism is intensifying in the wake of tough sanctions against Russia. Amid geopolitical turmoil in Europe, in the eurozone rose to 8.6% in June, which is an all-time high.



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Disclaimer:
This information is marketing material and does not present investment consultation, advice, investment research, or investment recommendation. The information is valid as of the issue date of the marketing material and may alter in the future. The value of the units in the collective investment schemes changes over time and it could be higher or lower from the value at the time of the investment. No profits are guaranteed and risk exists for the investors to not receive the full amount of their investments. Investments are not guaranteed by a guarantee fund which is created by the country or another form of guarantee. Information on the performance of the financial instruments in the past is not a reliable indicator for future performance. Therefore, it is recommended for investors to acquaint themselves with the Prospectus and the Document with key information for investors before making a final investment decision. You can find these documents in Bulgarian on the website of Compass Invest - www.compass-invest.eu, and you can request and get a free paper copy at the office of the management company at: Sofia, 19 George Washington Str, floor 2, during every business day from 9 am to 5 pm. Future results are subject to taxation, which depends on the personal situation of each investor and may change in the future. A summary of the rights of the investors is available at the following hyperlink in Bulgarian: here. The mutual funds, which are managed by Compass Invest, are actively managed without following an index. We would like to inform you that Management Company Compass Invest can make a decision to terminate the offering of funds on the territory of the Republic of Bulgaria. The investment in units of mutual funds, in addition to benefits, carries certain risks like: liquid, operational, interest, currency, and political risk, as well as macroeconomical risk, currency risk, concentration risk, etc. The full information about risks can be found in the Prospectus of the respective fund.
Risks:
Despite benefits, the investment in shares of mutual funds brings certain risks like:
1) Market risk with the following components: a) interest risk related to a decrease of the value of the investment due to a change of the interest rates levels b) currency risk related to a decrease of the value of the investment, denominated in a currency which is different from BGN and EUR c) price risk related to a decrease of the value of the investment in the case of unfavorable changes of the market’s prices;
2) Credit risk – related to a decrease of the value of the position in the case of unexpected events with a credit nature which are related to the issuers of financial instruments, the counter side of exchange and OTC transactions, as well as countries, in which they operate;
3) Operational risk – from errors or flaws in the system of the organization
4) Liquidity risk – in case of forced sales of assets under unfavorable market conditions;
5) Concentration risk – in case of incorrect diversification of exposures to groups of related clients, from the same economic branch, geographic area, etc.
6) Position risk which is related to the change of price of a certain instrument in result of factors related to the issuer or in case of a derivative instrument – related to the issuer of the base instrument;

Additional information for the risks can be found in the Prospectus of the respective fund, which is available here: www.compass-invest.eu