In June of last year, the markets agonized over Greece’s default. Now, a new economic crisis has emerged as the UK voted this month to exit the EU. In the two days following the Brexit, global markets shed roughly $3 trillion in value. However, as the dust settled, markets recovered as investors realized either the implications are not as destructive as feared or rather that it may promote further monetary stimulus. Clearly, there remains a global risk due to the heightened uncertainties and fluctuating currency valuations, but the impact on the US may be minimal.

From a currency standpoint, the British pound plummeted 9% in June against the US dollar to levels not seen since 1985. Conversely, the Japanese yen climbed 7% against the dollar for the month and traded around the ¥100 level for the first time since late 2013.

In spite of the chaos, the Dow Jones Industrial average and S&P 500 recovered most of its losses following the Brexit drama and are trading within 2% of historic highs. The US economy remains relatively stable, with low unemployment figures, a strong housing market and upbeat consumer sentiment. For the month, the Dow and S&P 500 improved 0.8% and 0.1%, respectively, while the NASDAQ slipped 2.1%. Year to date, the Dow and S&P 500 are up 2.9% and 2.7%, respectively. The NASDAQ is down 3.3%.

Laboratory Instruments and Products

The Index declined 1.7% for the month to close at 245.99 but is up 0.4% for the year. A majority of the companies declined in June, led by Pacific Biosciences, which fell 27.1% on stronger-than-average trading volume. Harvard Bioscience also recorded a sharp decline, slumping 21.6%.

Kewaunee Scientific experienced the greatest price increase for the month, climbing 13.6% as the company reported strong fiscal fourth quarter results on June 21 (see page 12). Quarterly sales for the company climbed 13% and EPS jumped 117% to $0.50, led by growth in Asia and the Middle East. Given the strength in orders and record backlog, the company expects continued growth in fiscal 2017.

Enzo Biochem was the only other company to report earnings this month. On June 8, the company reported a slightly narrower-than-expected adjusted EPS loss for the fiscal third quarter ending April 30. Sales advanced 10% for the quarter, led by double-digit revenue growth for the molecular diagnostics business. The company was added to the Russell 3000, Russell 2000 and Russell Global Indexes, effective June 24. Nevertheless, shares contracted 2.9% for the month.

In other financial news, on June 7, MTS Systems announced a public offering of 1.5 million common stock and 1.0 million tangible equity units primarily to fund the proposed acquisition of sensor producer PCB. The tangible equity units, which were priced at $100, consisted of a stock purchase contract and amortized notes with a final settlement in 2019. Including overallotment, the company sold 1.2 million tangible equity units and 1.9 million common shares for net proceeds of roughly $110.2 million and $73.5 million, respectively. Shares contracted 8.3% for the month.

Following another extension for the acquisition of Exiqon (see IBO 6/15/16), QIAGEN finally completed the transaction on June 23, amassing 94.5% of total shares. The company plans to acquire the remaining shares following the delisting of Exiqon. QIAGEN improved 1.1% for the month.

In ratings news, Citigroup downgraded Mettler-Toledo on June 23 from “Buy” to “Neutral,” but raised its price target by 5% to $400 per share.

Diversified Instrumentation

The Index advanced 0.6% in June to close at 204.08 and is up 8.8% for the year. In spite of the modest increase, most companies traded lower for the month, led by AMETEK, which slipped 3.3%. Danaher expanded 2.7% for the month.

Corning, which fell 2.0% for the month, was downgraded on June 10 by Drexel Hamilton from “Hold” to “Sell,” and by Bank of America from “Neutral” to “Underperform.” Drexel Hamilton lowered its price target on Corning by 37% to $14.50 per share due to weak demand for LCD glass. Bank of America cut its price target by 33% to $42.00 per share. However, on June 20, Citigroup initiated coverage of the company with a “Buy” rating and a price target of $23.00 per share.

On June 23, Robert W. Baird downgraded Illinois Tool Works from “Outperform” to “Neutral.” On the positive side, Bernstein upgraded Danaher on June 24 from “Market Perform” to “Outperform.”

International

Asia Pacific equity markets were mixed in June as a number of indexes recovered following the initial Brexit shock. A majority of Southeast Asia markets traded higher, as did China’s Shanghai Composite and India’s Sensex 30, which advanced 0.4% and 1.2%, respectively. However, Japan’s Nikkei 225 fell 9.7%, its worst monthly decline in four years.

Prices for all Pacific Region companies in the IBO Stock Table declined except for Techcomp, which expanded 8.3%. JEOL and Precision System Science recorded the largest declines, falling 50.5% and 40.9%, respectively.

Ironically, all European markets traded lower in June except for the London FTSE 100, which expanded 4.4%. Italy’s FTSE MIB recorded the largest decline, dropping 10.1%. Germany’s DAX fell 5.7%.

Prices for the UK-based companies in the IBO Stock Table were mostly higher. Abcam recorded the largest gain, climbing 20.2%, while Horizon Discovery dropped 18.7%.

Both Oxford Instruments and Halma, which advanced 10.5% and 7.0% for the month, respectively, reported annual results. On June 15, Oxford Instruments reported that fiscal 2016 organic sales fell 5.7% due to weak industrial markets. However, adjusted EPS expanded 2% to 49.2 pence ($0.70) as a result of cost reductions.

On June 14, Halma reported that fiscal 2016 adjusted EPS ending April 2 increased 10% to £0.34 ($0.48). Sales for the company expanded 11%, 6% organically, and the annual dividend rose 7% to 12.81 pence ($0.18).

Prices for other European companies were mixed. Sartorius, which recorded the largest gain, climbed 13.1%, implemented a 4-for-1 stock split on June 13.