Global stock markets had a mixed week as investors wait for vital inflation data in the United States and the results of national elections in Europe
Cyclical stocks such as banks and energy companies have performed well as the artificial intelligence-driven technology rally pauses for breath. But considerable uncertainty continues to surround the timing of the Federal Reserve’s next move on interest rates, with one policymaker raising the possibility of an increase should indicators suggest inflation remains a problem. The publication of US personal consumption expenditures data – the Fed’s preferred measure of price rises – is expected to bring clarity, with investors hoping a weaker-than-expected reading will lay the groundwork for a rate cut in September.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday flat for the week so far, with the S&P 500 edging 0.3% ahead. The week began with further falls in stocks linked to the recent AI boom, and the technology sector was also hit by news of regulatory action in Europe against two of America’s largest software companies. Revised GDP data showed the US economy had grown slightly faster than previously thought in the first three months of the year, although more recent figures showed a decline in factory goods orders.
UK
In the UK, the FTSE 100 closed on Thursday 0.7% down for the week so far. This came after the Bank of England issued a warning that financial markets could face a “sharp correction” later this year due to the fallout from global elections, rising levels of risk in private equity firms, and the continued impact of higher borrowing costs. Ahead of next week’s general election, meanwhile, economists warned about the fragile state of Britain’s public finances. Latest data showed a surprise fall in retail sales in June as well as signs of cooling in the UK labour market.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 0.2% for the week, although France’s CAC 40 fell 1.3%. Investors in Paris are nervously awaiting the results of the first round of national elections that take place on Sunday, although the week had begun on a more upbeat note as yields on French bonds eased back from recent peaks. News of a profit warning from one of France’s largest manufacturing companies added to the gloom.
Asia
In Asia, the Hang Seng index in Hong Kong fell 1.7% after data showed a decline in industrial profits, casting further doubt on China’s ability to stage a sustained recovery in 2024. Stocks had risen earlier in the week on hopes of further interest rate cuts. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 1.9% following further falls in the value of the yen – the weaker currency increases the relative value of Japanese companies’ international earnings, driving market gains. The yen’s recent decline has been caused by high interest rates in the US combined with expectations that the Bank of Japan will find it difficult to tighten monetary policy due to sluggish domestic growth.
June 21 | June 27 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8237.7 | 8179.7 | -0.7 |
FTSE 250 | 20442.4 | 20331.8 | -0.5 |
S&P 500 | 5464.6 | 5482.9 | 0.3 |
Dow Jones | 39150.3 | 39164.1 | 0.0 |
DAX | 18163.5 | 18205.4 | 0.2 |
CAC 40 | 7628.6 | 7530.7 | -1.3 |
ACWI | 801.3 | 803.8 | 0.3 |
Hong Kong Hang Seng | 18028.5 | 17716.5 | -1.7 |
Nikkei 225 | 38596.5 | 39341.5 | 1.9 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 27 June 2024.
