General Market Review
Overall, the sentiment remained firm in June as risk assets quickly shrugged off concerns about a potential escalation in the Middle East and instead traded higher on tariff optimism and expectations on lower taxes in the US. Nevertheless, the mid-June Israel-Iran conflict and threats by Iran to block the Strait of Hormuz added short-term volatility in the oil and shipping segments. With the earnings season ahead, market participants could watch closely for signs of margin pressure and softening consumer demand as the labour market shows early signs of cooling. US equity markets closed on a high note, the S&P500 increased by +5%. European equity markets ended the month in slightly negative territory with the Stoxx 600 at -1.2%. In the first half of 2025, the US-Dollar weakened by 10% and fell to its weakest level since February 2022, as measured by the DXY Index that calculates the performance of the six major currencies against the Greenback.
The Federal Reserve held its policy rate unchanged at 4.25% (lower bound) to 4.5% (upper bound) and emphasized a patient approach to monetary policy. FED-chair Powell reiterated the FED’s data-dependent approach on a forward-looking basis. Market participants anticipating two rate cuts (50 Bp) for the residual year, shifting the first rate cut expectation to October.
In the US, the labour market was weaker as non-farm payrolls increased only by +139k in May from +177k in April. The unemployment rate was unchanged at 4.2% in May. In the Eurozone, the unemployment rate was unchanged at 6.2% as well.
In the US, consumer price inflation for the month of May was in line with consensus and slightly higher than in the prior month. Headline inflation has increased by +2.4% (y-o-y) whereas core inflation (excluding energy and food) came in at +2.8% (y-o-y).
In the Eurozone, consumer price inflation figures for the month of May came in lower versus the prior month. Headline inflation has increased by +1.9% and core-inflation has increased only by +2.3% respectively.
US 10-year treasury yields decreased by 17 Bp from 4.4% to 4.23%. On the other hand, German 10-year bund yields have increased by 11 Bp from 2.5% to 2.61%.
The MSCI World Index increased by +4.3% (USD den.) and the MSCI Europe Index decreased by -1.3% (EUR den.).
Energy and Transportation
Oil prices gradually climbed higher in the beginning of June as the military conflict between Iran and Israel intensified. A series of attacks on Iran’s oil and gas facilities raised concerns that the conflict may impact supply. Oil prices spiked on the 19th of June with Brent reaching nearly $ 79 per barrel as the conflict further intensified and Donald Trump weighed US intervention. In the tanker market rates have more than doubled for crude tankers sailing through the Street of Hormuz reaching $ 60k/day, the highest since 2023. Short after a US military intervention, targeting Iran’s nuclear sites, a ceasefire was proposed by the US government, which both Iran and Israel have agreed to accept. Subsequently, oil prices started to decline. At month end the price of Brent oil closed at $ 67.6 per barrel and thereby Brent was still up by $3.7 per barrel month-on-month. In this environment both oil and gas as well as oil services stocks have performed well. The Stoxx 600 Oil and Gas Index was up by +4,2% (EUR den.) at month end. VLCC-rates (Very Large Crude Tanker Rates) fell back to the previous month-end levels of $25k/day, whereas Aframax-crude and MR-product tanker earnings closed the month at elevated levels of $41k/day and $31k/day. Both crude tanker and product tanker names performed negatively. Capesize rates in the dry-bulk-segment fell back to moderate levels of $17.5k/day. In the container segment the Shanghai Containerized Freight Index (SCFI) fell by -10% month-on month and -37% year-on-year. Most container Liner stocks closed the month in negative territory. The Russel 2000 Marine Transportation Index fell by -1.3% (USD denom.). In a generally positive market environment, the Dow Jones Transportation Average Index (USD) increased by +5.0%. The aviation sub-segment was slightly weaker. The US Global Jets (USD) Index was only up by +1.3% and thereby lagging the overall market. Full-Service Airlines could see pressure on trans-Atlantic fares due to robust capacity additions. In the US market, capacity growth, while slowing, still outpaces GDP growth, which may put pressure on fares. On the other hand, airline profit may get a tailwind from lower jet fuel prices. The renewable energy segment performed solidly with the S&P Global Clean Energy Index up by +3.9%. However, US companies were facing headwinds at month end as the US administration has proposed a new a new spending legislation where taxes on wind and solar projects using Chinese components were to be raised and tax credits are phased out.
Fund Performance
The fund performance of the USD share classes was positive whereas the EUR share classes performed slightly negatively as the USD depreciated further throughout the month.
During with first two weeks of the calendar month the Israel – Iran conflict further escalated, and the oil prices spiked with Brent prices reaching more than $ 74 per barrel on the 13th of June. Crude tanker rates more than doubled. At this point in time partial profits have been taken in the crude tanker, exploration and production as well as oil services segments. The fund held a long position in Frontline with an exposure of 6.5% of NAV, which was reduced to 3.25% of NAV. Moreover, our long position in VAR Energi with an exposure of 2.5% of NAV was sold. Additionally, we have cut our exposure in TGS from 4.5% of NAV to 2.25% of NAV. Given the good fundamental perspective of the crude tanker segment Frontline shares were repurchased at a 6% lower level at month end when geo-political tensions eased. With that we have re-established our crude tanker exposure as the OPEC+ consortium may announce another supply increase for the month of August. Additionally, we expect tight tanker supply to support freight markets in the second half of the year. Similarly, the fund’s engagements in VAR Energi and TGS were re-established at appr. 1% lower share prices when Brent prices dropped back below $ 70/barrel.
The monthly performance attribution for the fund looks as follow in USD terms. Within the shipping equity segment the long book had a positive contribution of +0.6% whereas the short book was negative at -0.2% respectively. Long positions in the crude/product, dry-bulk and offshore supply segments contributed +0.3%, -0,1% and +0,4% respectively. Short positions in the container segment contributed -0.2%. On the other hand, short positions in the freight services segment as well as other transportation sectors has contributed a negative -0.3% and a positive+0.7% respectively. Overall hedging positions via short index futures had a negative effect of -0.2%.
For more information, you can find our latest Factsheet – June 2025.
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