InsightJune 20, 2024

Weekly market report: June 20, 2024

USA

The major indexes ended mostly higher for the week, with the S&P 500 Index and Nasdaq Composite touching new highs. Relatedly, enthusiasm over the potential of artificial intelligence appeared to provide a continuing tailwind to technology-related stocks and growth shares, which outpaced value stocks by the largest margin since March 2023 (461 basis points), according to Russell indexes. Another factor behind growth shares’ outperformance may have been reassuring inflation data and falling interest rates, which increase the theoretical value of growth companies’ future earnings. On Wednesday, the Labor Department reported that headline consumer price index (CPI) inflation was flat in May for the first time in nearly two years. Core (less food and energy) prices rose 0.2%, a tick below expectations and a seven-month low. On a year-over-year basis, core inflation fell to 3.4%, the lowest level since April 2021. The downside growth and inflation surprises pushed the yield on the benchmark 10-year U.S. Treasury note sharply lower for the week, from 4.43% to 4.21%.

Europe

STOXX Europe 600 Index returned -2.39% as political uncertainty undermined confidence following the strong showing by far-right parties in the European Parliament elections the previous weekend. None of the major European bourses avoided the fallout. Italy’s FTSE MIB fell 5.76%, Germany’s DAX gave up 2.99%, and France’s CAC 40 Index shed 6.23%. The UK’s FTSE 100 Index finished 1.19% lighter.

Japan

Japan’s stock markets registered mixed weekly performance, with the Nikkei 225 Index gaining 0.3% and the broader TOPIX Index down 0.3%. The outcome of the Bank of Japan’s (BoJ’s) June meeting was viewed as broadly dovish, lending support to equities. In the fixed income markets, the yield on the 10-year Japanese government bond (JGB) fell to 0.93%, from 0.98% at the end of the prior week.

China

Chinese equities fell in a holiday-shortened week as data showed that deflationary pressures continued to weigh on the economy. The Shanghai Composite Index declined 0.61%, while the blue chip CSI 300 gave up 0.91%. In Hong Kong, the benchmark Hang Seng Index was down 2.31%.

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