After 2 months of strong showing, the European STOXX 600 Index extended gains in June, slightly gaining 2.85% (4.19% in US$ terms) over the month. As new cases in Europe stayed at a very low level, most countries are close to a full-fledged reopen, concerns over the covid pandemic faded out from the investment market.
With that out of the way, Brexit matters are finally back on the table. Currently, the negotiations are in a deadlock, as both sides have yet to reach consensus on several key issues including fisheries and court matters. With the transition period not extending, corporations are worried that there will be a no-deal Brexit as both the Prime Minister Boris Johnson and the Bank of England suggested.
Economically, Europe is still in limbo. Despite the continued uptrend, global demand remains far from a full recovery, various indicators still show a contracting local economy. Disregarding the limited positive signs, fundamental weakness and Brexit concerns should continue to haunt the investment market, we would not suggest significant investment in the region.
