Market Monitor – 14 June 2024

Market Monitor – 14 June 2024

Global share prices endured a difficult week following news of another snap election in Europe and fears of further delays to interest rate cuts in the United States.

Stock markets began the week on the back foot after the surprise announcement by President Macron of France that he intends to bring forward the country’s parliamentary elections. This followed the success of French right-wing parties in last Sunday’s European poll. Investors are concerned that Macron’s gamble could result in a legislative deadlock at a time when France is facing a substantial fiscal deficit.

News of further falls in inflation in the US was welcomed, but the Federal Reserve kept rates unchanged – as widely expected – at its June meeting on Wednesday. Economic data in the US remains mixed, with recent rises in job numbers providing policymakers with fresh evidence that inflationary pressures could persist.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.4% down for the week so far, although the S&P 500 gained 1.6%. Technology stocks were the one bright spot, with share prices boosted by the news that one of the world’s largest electronics companies was planning to incorporate artificial intelligence in its products. Both the S&P 500 and the tech-heavy Nasdaq index rose to all-time highs as a result. However, downbeat comments from Fed chair, Jerome Powell, tempered investors’ expectations of interest rate cuts, with markets now forecasting just a single reduction in 2024.

UK

In the UK, the FTSE 100 closed on Thursday 1% down for the week so far after data showed the economy had stagnated in April – news that appears unlikely to boost the election hopes of the incumbent Conservative party. An investment bank report published on Monday suggested that the expected Labour victory on 4 July could be a positive for UK markets. The report said the party’s cautious but pro-growth approach may be able to help reverse the capital outflows of the past two decades.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 1.6% for the week, while France’s CAC 40 slumped 3.7% as political turmoil rocked markets. Investors were primarily worried about the uncertainty that the surprise elections in France could create – not just in the run-up to the polls, but also in the event of any power-sharing compromises that could ensue. Markets were already mildly concerned about France’s growing deficit and signs of difficulties in its economy.

Asia

In Asia, the Hang Seng index in Hong Kong fell 1.4% after disappointing inflation data weighed on investor sentiment. The rate of consumer price rises was unchanged last month while producer price inflation fell, highlighting the ongoing weakness in China’s economy. There was further bad news in the shape of proposed tariffs on imports of Chinese electric vehicles into the European Union. Japan’s Nikkei 225 index of leading shares, meanwhile, edged 0.1% ahead after the country’s first-quarter GDP growth was revised upwards. However, investors were mainly focused on whether Friday’s monetary policy decision from the Bank of Japan would provide any clues about the likely trajectory of interest rate rises in the second half of the year.

June 7
June 13
Change (%)
FTSE 100
8245.4
8163.7
-1.0
FTSE 250
20555.4
20196.0
-1.7
S&P 500
5347.0
5433.7
1.6
Dow Jones
38799.0
38647.1
-0.4
DAX
18557.3
18265.7
-1.6
CAC 40
8001.8
7708.0
-3.7
ACWI
794.2
799.7
0.7
Hong Kong Hang Seng
18367.0
18112.6
-1.4
Nikkei 225
38683.9
38720.5
0.1

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 13 June 2024.

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14 June 2024
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Global stock markets made further gains this week after weaker economic data in the United States raised the likelihood of an interest rates cut later in the summer.
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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.

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