Weekly podcast – Market overview
This week’s host, Head of Property Research, Ollie Creasey is joined by Head of Research, Chris Beckett, and Sheena Berry, Equity Research Analyst, to discuss the ups and downs of the past week. Among topics discussed - GDP, interest rate cuts, employment and inflation data and much more.
This is a marketing communication and is not independent investment research. Financial Instruments referred to are not subject to a prohibition on dealing ahead of the dissemination marketing communications. Any reference to any securities or instruments is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or instruments mentioned in it.
Market overview – Chris Beckett, Head of Research
Tech stock returns paint a tricky week for markets
Last week, global markets experienced a slight retreat, with the MSCI All Country World Index seeing a modest dip of -0.9% (11.9% YTD).
The US market’s performance was characterised by a diverse range of returns. US large caps followed the general trend with a -0.8% decrease, still up 15.3% YTD. Small-cap and value shares fared relatively well, outperforming the large-cap stocks that have dominated 2024 thus far. Growth stocks saw a -2.4% decrease (16.9% YTD), while value stocks rose by 1.2% (11.2% YTD). The tech sector, which has enjoyed strong returns this year, faced a -2.1% setback on the week, including its largest daily loss since October 2022. A negative reaction to earnings reports from Tesla (-12.3%) and Google parent Alphabet (-5.0%) was the main catalyst for the selling.
In Europe, the MSCI Europe ex UK Index edged up by 0.3% (8.3% YTD), lifted by a favourable reception to Friday’s quarterly earnings reports. The major stock indexes had a mixed week, with Germany’s large cap benchmark up by 1.4% (9.9% YTD), while French and Italian equivalents saw declines of -0.2% (2.5% YTD) and -0.9% (16.0% YTD) respectively. The euro held steady against the US dollar, ending the week at USD 1.09 for EUR.
UK large cap stocks climbed 1.6% (9.5% YTD), and mid caps rose 1.4% (10.6% YTD). The British pound remained stable against the US dollar, closing the week at US$1.29. UK government bonds ended the week little changed, with the 10-year gilt yield at 4.10%. The gilt market has shown little apparent concern for the fiscal challenges facing the government, largely due to the belief that there is a keen desire to avoid anything that could roil them, like unfunded spending promises.
US rate cut expectations solidified
On Thursday, the US Commerce Department brought positive news to the markets, with a 1.0% rise in durable goods orders in June – the largest increase since March 2022. Real consumer spending also went up at an annualised rate of 2.3% in the second quarter, surpassing expectations and the previous quarter’s 1.5% increase.
US economic growth was also noteworthy, with an annualised rate of 2.8% in the second quarter, a figure that not only exceeded expectations but doubled the pace of the first quarter. Core personal consumption expenditure (PCE) – a widely followed inflation indicator – rose slightly by 0.2% M/M in June, but the annual rate remained steady at 2.6%. The reading is not substantially higher than the Federal Reserve’s (Fed) preferred inflation target of 2.0%. The inflation figures seem to have solidified market expectations for a Fed rate cut at the upcoming September meeting, although this week’s meeting could provide more information in that regard.
Author
Ollie Creasey
Head of Property Research
Chris Beckett
Head of Research
Sheena Berry
Equity Research AnalystTo listen to all the past Weekly Comment podcasts click here or subscribe via the apps below:
