Global stock markets had a positive week after central banks on both sides of the Atlantic made long-awaited cuts to interest rates.
While the Federal Reserve in the United States continues to weigh up its options, the Bank of Canada and the European Central Bank have decided to ease monetary policy considering recent falls in inflation. The Fed and the Bank of England are expected to follow suit in the next few months – but exactly when remains open to question.
Elsewhere, renewed falls in oil prices helped ease concerns about rising price pressures, and there were further gains among companies with significant exposure to artificial intelligence technology.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.5% up for the week so far, with the S&P 500 gaining 1.4% after hitting an all-time high at close on Wednesday. Investors in the US welcomed signs that the American economy is starting to cool – a development that makes it more likely the Fed will cut rates at the end of the summer. Latest figures showed there had been a sharper fall in new job openings than analysts had expected, while output in the manufacturing sector declined. Technology stocks performed particularly impressively following further upbeat trading news from firms involved in AI.
UK
In the UK, the FTSE 100 closed on Thursday 0.1% up for the week so far, with gains limited by weakness in oil prices. The ongoing election campaign is doing little to move markets at present, but there was some positive economic news in the shape of a return to growth for the UK manufacturing sector and a small increase in retail sales in May. All eyes are now on the Bank of England’s Monetary Policy Committee meeting later this month.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 0.8% for the week, while France’s CAC 40 gained 0.6%. While the ECB’s first rate cut since 2019 was universally expected, the bank’s next move is less obvious. ECB president Christine Lagarde said she was now expecting inflation to be slightly higher this year than previously forecast, making a second rate cut in July less likely. Data published this week showed that business activity in the eurozone was growing at its fastest rate in a year, although separate figures highlighted weakness in manufacturing and retail sales.
Asia
In Asia, the Hang Seng index in Hong Kong gained 2.2% after statistics indicated that China’s recovery is gathering pace. The country’s services sector performed particularly strongly in May, while an upgraded growth forecast from a major credit rating agency also boosted investor morale. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 0.6%, with strong performance from services likewise driving gains. Japan’s semiconductor firms also benefited from improving AI sentiment in the US.
May 31 | June 6 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8275.4 | 8285.3 | 0.1 |
FTSE 250 | 20730.1 | 20715.9 | -0.1 |
S&P 500 | 5277.5 | 5353.0 | 1.4 |
Dow Jones | 38686.3 | 38886.2 | 0.5 |
DAX | 18497.9 | 18646.5 | 0.8 |
CAC 40 | 7992.9 | 8040.1 | 0.6 |
ACWI | 785.5 | 796.5 | 1.4 |
Hong Kong Hang Seng | 18079.6 | 18476.8 | 2.2 |
Nikkei 225 | 38487.9 | 38703.5 | 0.6 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 6 June 2024.
