The first half of 2015 was downbeat for the broader U.S. market with the S&P 500 (SPY) barely progressing and Dow Jones Industrial Average (DIA) index shedding over 1%. Investors should note that the S&P 500 saw the ‘worst first half’ in five years while the European stocks endured the most awful ‘three months’ in Q2 since 2012.

The primary factor that led to this catastrophe originated in the month of June thanks to the Grexit concerns. This makes it necessary for us to look back at the top financial stories of the month and check its impact on the ETF world. One should note that the S&P 500 jumped to hit a new high on May 21, but the nagging Greek debt drama washed away all the rosiness from the U.S. market, and sent jitters across the globe.

‘Grexit’ Fears

Debt default concerns in Greece have never looked so grim before. After a tug of war between Greece and its creditors for the entire month of June, Greece turned out to be the ‘first developed economy’ defaulting on loan repayments worth $1.6 billion to the IMF.

The country’s creditors had asked for more austerities from Athens in exchange of a bailout, but Athens showed no signs of compliance. The scarcity of cash is so stringent that Athens imposed capital controls and closed its banks till July 6, to arrest aggressive outflows from the country’s banking system (read: If Greece Defaults, Buy These 4 ETFs to Profit).

If this was not enough, Greece prime minister Alexis Tsipras has arranged for a referendum wherein Greek citizens will vote for or against the reform proposals set by the country’s creditors. This general vote on July 5 will decide the fate of Greece’s membership in the Euro zone. Until then, Athens will have the sword of Damocles hanging over its head.

No doubt, Greek stocks and the pure play ETF on the country, Global X FTSE Greece 20 ETF (GREK), were the hardest hit in this process, losing 25% in June. Several equity markets felt the weight of this drama. The biggest Europe ETF – Europe Hedged Equity Fund (HEDJ) – was down 4.3%; the largest U.S. ETF – SPDR S&P 500 ETF Trust (SPY) – lost 2.7%; the all world ETF –  iShares MSCI ACWI ETF (ACWI) –  shed 3.7% and the largest emerging market ETF – Vanguard FTSE Emerging Markets ETF (VWO) – was down 3.4%.

Fed Still Dovish But Slower Rate Hike Looms

Contrary to popular belief, the Fed indicated in June that its doves are still to fly far from the border of the U.S. economy. The U.S. central bank remains accommodating and hinted at a slower rate hike trail when the step is actually taken sometime later this year.

To add to this, the Fed slashed its projection for the benchmark interest rate for 2016 and 2017, though the guidance for the ongoing year was kept unchanged. This indirectly promised investors a few more months of cheap money inflows and took a bite out of the otherwise raging greenback. As a result, PowerShares DB US Dollar Bullish Fund (UUP) lost about 2.3% in June (read: 3 ETF Winners and a Loser Post Fed Meeting).

Treasuries Fall

Treasuries were on a roller-coaster ride last month with yields on the U.S. benchmark 10-year notes hitting this year’s high (2.50%) on June 10, on heightened rate hike worries. But yields fell later as the Fed hinted at a sluggish rate hike trajectory. Plus, Greek concerns brightened the appeal for safe haven assets in June adding some strength to the otherwise struggling U.S. treasuries. As of June 30, 2015 yields on the U.S. benchmark 10-year notes were 2.35%.

Still, overall treasury yields were on the higher side throughout June. Treasuries logged their ‘first quarterly loss’ since 2013. After all, the Fed officials even went on to say that the rebounding U.S. economy is strong enough to endure one or two rate hikes this year and insisted that the rate hike decision will be solely economic data-reliant. Greece debt default and the looming Fed rate hike – two opposing forces – finally compelled iShares 20+ Year Treasury Bond ETF (TLT) to shed about 3% in the month.

China Sell-Off

June 2015 can solely be remembered for acute China stocks sell-off on overvaluation concerns. Chinese stocks, especially the A-shares, performed phenomenally in the first five months of the year with some of the ETFs having almost doubled (read: 5 Top Performing Country ETFs of 1H).

But the high valuation, a faltering economy despite a spate of stimulus measures launched by the central bank and rising risks of the Greek debt default led the Chinese benchmark indices to log consecutive weekly declines (as of June 26, 2015) since February 2015.

China A-Shares ETF Market Vectors ChinaAMC SME-ChiNext ETF (CNXT), which outperformed the market in the first five months, lost over 24% in June.  The biggest china equities ETF, iShares China Large-Cap ETF (FXI) was down over 4.5%. Almost the entire space was in red in June.

Lucky Month for Grains

The agricultural space was severely beaten down in the early phase of 2015 on a strong dollar and favorable weather outlook. However, things turned around in June as worries over wet weather in America’s key growing belts led traders to bet on the contracts of several agricultural commodities like wheat, corn and soybean. On the other hand, parched weather and the delayed use of pesticides raised the possibility of lower cocoa supply from Ghana this season.

All these led the related ETFs to soar in June, snapping the normal sluggish trend. Teucrium Wheat ETF (WEAT - ETF report), Teucrium Corn ETF (CORN -ETF report) and Teucrium Soybean Fund (SOYB) and Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NIB) were up 13.3%, 7.4%, 6.6% and 8.6%, respectively in the last one month (read: Can El Nino Boost Agricultural ETFs?).