Weekly market report: July 24, 2024

USA

After a week in which market leadership continued to shift to small-cap and value equities, the major indexes concluded mixed. Value equities beat growth stocks by 477 basis points (4.77 percentage points) as assessed by Russell indices, although the narrowly focused Dow Jones Industrial Average outperformed. This is the biggest differential since growth shares outperformed by 654 basis points in March 2023.

The economic calendar for the week often came as a pleasant surprise. Perhaps most impressively, retail sales increased by 0.8% in June—well above expectations and the most since January 2023—apart from the erratic gas and car divisions.

In a speech on Monday, Fed Chair Jerome Powell discussed the central bank's dual mandate, stating, "We're going to be looking at both mandates now that inflation has come down and the labor market has indeed cooled off." They have far better equilibrium. For the most part of the week, the yield on the benchmark 10-year U.S. Treasury note appeared to decrease in tandem with worries about inflation. However, on Friday, it appeared to spike in response to concerns about the disruptions caused by Microsoft.

Europe

As trade tensions between the United States and China increased, the STOXX Europe 600 Index finished 2.68% lower. The main continental indices saw losses of 3.07% for Germany's DAX, 2.46% for France's CAC 40 Index, and 1.05% for Italy's FTSE MIB. The FTSE 100 Index fell 1.18% in the UK.

As anticipated, the European Central Bank (ECB) maintained its benchmark interest rate at 3.75%. It stressed that economic data will inform its judgments and stated that it would not precommit to any rate path.

Japan

Over the course of the week, Japan's major markets saw losses; the Nikkei 225 Index dropped 2.7%, while the TOPIX Index as a whole down 1.2%. Growing worries about harsher U.S. restrictions on exporters of advanced semiconductor technology to China, including several Japanese chip companies, hurt technology equities.

The yield on the 10-year Japanese government bond dropped to 1.04% from 1.06% at the end of the previous week due to speculation about whether the Bank of Japan (BoJ) could raise interest rates at its meeting on July 30–31. The BoJ is also expected to provide details on the tapering of its massive bond purchases during this meeting.

China

Chinese equities rose as investor sentiment was largely unaffected by weaker-than-expected economic growth in the second quarter. The Shanghai Composite Index was up 0.37% while the blue chip CSI 300 added 1.92%. In Hong Kong, the benchmark Hang Seng Index retreated 4.79%

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