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Weekly Market Recap

24 June, 2024


Our Multi-Asset Solutions team produce a weekly market recap which aims to summarise the previous week’s major events and developments that may impact markets. They try to include points that may aid you in your decision making or conversations with clients. This is supplemented by a market data sheet, offering a summary of financial market performance. Last week’s summary is below. 

Economic and political backdrop

The UK

As expected, the Bank of England (BoE) left its key interest rate unchanged at a 16-year high of 5.25%. Seven members of the Monetary Policy Committee voted to keep rates steady; two backed a cut to 5%. Some members said the decision was finely balanced, potentially signalling that policymakers are drawing closer to reducing borrowing costs this year.

The headline inflation rate dropped to the central bank’s target of 2% in May, down from 2.3% the month before. Core inflation, which excludes food and energy, eased to 3.5% from 3.9% in April. However, services inflation of 5.7% was higher than consensus expectations.

The US

The start of last week brought some additional evidence that easing labour demand and dwindling savings might be making consumers more cautious. On Tuesday, the Commerce Department reported that retail sales had increased only 0.1% in May, according to advance estimates, while falling a downwardly revised -0.2% in April. Notably, sales at bars and restaurants fell -0.4%, signalling less discretionary spending, in particular, but sales at grocery stores also fell -0.4%, perhaps reflecting recent price cuts in certain food categories (retail sales data are not adjusted for inflation).

In a reversal of recent trends, however, manufacturing signals released the same day were somewhat stronger. The Federal Reserve (Fed) announced that industrial production had expanded 0.9% in May, well above consensus expectations and the fastest pace in nearly a year. Factories were also operating at 78.7% of capacity, a tick above expectations and the highest level since last November.

Data released later in the week also arguably suggested that the economy was stronger than indicated by the retail sales data. On Friday, S&P Global announced that its composite purchasing managers’ index (PMI) of business activity had risen to 54.6 in June, according to preliminary data, its best level in over two years (levels above 50.0 indicate expansion). The services sector appeared to be in especially good shape, with payrolls increasing at the best pace in five months and rebounding from two months of declines. Encouragingly, selling price pressures in the sector were among the lowest recorded since the onset of the pandemic. Services providers continued to face higher wage bills, however, suggesting some pressure on operating margins.


The Swiss National Bank lowered rates by 25 basis points (bp) for the second consecutive meeting, taking its policy rate to 1.25%. The accompanying statement noted that inflation pressure has decreased since the previous quarter. Meanwhile, Norway’s central bank, Norges Bank, kept its rate at 4.5%. It said that based on its current assessment of the outlook and balance of risks, the policy rate would likely be kept at this level for the rest of the year before gradually being reduced.

Private sector business activity in the eurozone unexpectedly slowed in June as services lost momentum and manufacturing contracted more sharply, PMIs showed. The HCOB Composite PMI – combining activity in manufacturing and services – fell to 50.8 from 52.2 in May, according to preliminary figures compiled by S&P Global. In Germany, overall business activity increased slightly, with the slowdown in the rate of expansion reflecting weakness in manufacturing production. In France, a decrease in new orders caused output to contract for a second month in a row.


The yield on the 10-year Japanese government bond (JGB) rose to 0.97%, from 0.94% at the end of the previous week, as investors sought to digest data showing that inflation had accelerated in May and how this would factor in to the decision-making of the Bank of Japan (BoJ) about when to next raise interest rates. The nationwide core consumer price index rose 2.5% year on year in May, following a 2.2% uptick in April, but was slightly short of consensus expectations for a 2.6% increase. BoJ Governor Kazuo Ueda reiterated that a July rate hike is possible, depending on data, even as the central bank is set to provide details of its planned tapering of JGB purchases in the same month, as the two are separate matters.

In the currency markets, the yen weakened to around JPY 159.8 against the USD, from the prior week’s 157.4, hovering near fresh 34-year lows as it remained weighed down by US-Japan interest rate differentials. Japanese authorities again expressed their readiness to take resolute action if there is speculative, excessive volatility in the foreign exchange markets. This followed their interventions in April and May 2024 to buy yen and sell US dollars to strengthen the value of the Japanese currency, and this appears to have had limited effect in reversing the yen’s downtrend.

On the economic data front, expansion in business activity across Japan’s private sector stalled in June, with the flash composite PMI compiled by au Jibun Bank falling to 50.0, from 52.6 in May. This was driven by a fall in services activity that was partially attributed to labour constraints. However, business conditions within the manufacturing sector improved marginally for a second successive month. Separate data showed that Japan’s exports surged 13.5% year over year in May, helped by weakness in the yen and solid increases in shipments to the US and China.


Industrial production rose a weaker-than-expected 5.6% in May from a year earlier, slowing from April's 6.7%. Fixed asset investment grew 4% in the calendar year to May compared with a year ago but eased from the January to April period as real estate investment declines deepened. Meanwhile, retail sales increased an above-consensus 3.7% in May from a year earlier, outpacing April’s 2.3% gain. The nationwide urban unemployment rate remained steady at 5%.

The People’s Bank of China injected RMB 182 billion into the banking system via its medium-term lending facility and left the lending rate unchanged at 2.5%, as expected. With RMB 237 billion in loans set to expire this month, the operation resulted in a net withdrawal of RMB 55 billion from the banking system, but the central bank boosted funding by injecting RMB 4 billion in short-term loans. Chinese banks left their one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively, as expected.

China’s new home prices fell -0.7% in May, accelerating from a -0.6% drop in April, marking the steepest month-on-month contraction in nearly a decade, according to the statistics bureau. The data – which showed that new home prices declined for the 11th straight month – came after Beijing unveiled a historic rescue package in May to revive the property sector. Some analysts have cautioned that the measures may not be sufficient to draw a line under the housing market slump, which remains a significant drag on the economy.


As expected, the Reserve Bank of Australia (RBA) held the cash rate unchanged at 4.35% at its June meeting, which was broadly expected. The statement, however, was modestly more hawkish than the prior meeting, mostly reflecting data evolvement since then. The final paragraph narrowed its focus on upside risks to inflation specifically and also emphasised that it “will do what is necessary” to get inflation back to target. Flash Australia composite PMIs showed weaker business conditions and new orders in June.


Last week, the MSCI All Country World Index (MSCI ACWI) gained 0.5% (11.4% YTD).

In the US, the S&P 500 Index recorded a modest gain of 0.6% (15.4% YTD) over the shortened trading week (markets were closed Wednesday in observation of the Juneteenth holiday), helping push the S&P 500 to fresh all-time highs. The week also saw modest signs of a broadening and rotation in the market, with value stocks outperforming growth shares, small caps outperforming large caps and most of the major benchmarks outperforming the technology-heavy Nasdaq Composite, which ended broadly flat for the week (18.3% YTD). The Russell 1000 Growth Index returned 0.3% (20.5% YTD), Russell 1000 Value Index 1.2% (6.8% YTD) and Russell 2000 Index 0.8% (0.4% YTD). Friday was a so-called triple-witching day, with roughly USD 5.5 trillion in options related to indexes, individual stocks and ETFs set to expire, according to Bloomberg and options platform SpotGamma.

In Europe, the MSCI Europe ex UK Index increased 0.7% (9.3% YTD) rebounding as worries about political uncertainty appeared to ebb and the outlook for monetary policy easing brightened. Major stock indexes rose. Most major European markets advanced. Germany’s DAX Index put on 0.9% (8.4% YTD), France’s CAC 40 Index climbed 1.8% (3.9% YTD) and Italy’s FTSE MIB Index surged 2.0% (13.6% YTD). Switzerland’s SMI Index was down -0.3% (11.2% YTD). The euro was little changed versus the US dollar, ending the week at USD 1.07 for EUR.

In the UK, the FTSE 100 Index rose 1.2% (8.7% YTD) and the FTSE 250 Index gained 1.7% (5.6% YTD). The British pound weakened versus the US dollar, ending the week at USD 1.26 for GBP, down from 1.27.

Japan’s stock markets generated negative returns over the week. The TOPIX Index slid -0.8% (16.4% YTD) and the TOPIX Small Index gave back -0.3% (11.6% YTD). Uncertainty about the future trajectory of the BoJ’s monetary policy weighed on sentiment.

In Australia, the S&P ASX 200 Index firmed 0.9% (5.0% YTD) as the US markets hit new all-time high and European markets, particularly France, stabilised. Australian government bond yields moved higher after the slight hawkish tone from the June RBA meeting. The Australian dollar modestly strengthened against the US dollar by 0.5%.

MSCI Emerging Markets Index closed 1.0% higher (7.6% YTD), with a positive contribution to performance from the stock markets of India, Taiwan, South Korea and Brazil and a negative contribution from those of China.

Chinese stocks retreated as mixed economic data dampened investor sentiment. The Shanghai Composite Index declined -0.9% (1.7% YTD), while the blue-chip CSI 300 Index ticked down -1.1% (2.8% YTD). In Hong Kong, the benchmark Hang Seng Index added 0.5% (7.9% YTD).

In Hungary, the National Bank of Hungary (NBH) held its regularly scheduled meeting on Tuesday and reduced its main policy rate, the base rate, from 7.25% to 7.00%. The NBH also reduced the overnight collateralised lending rate – the upper limit of an interest rate “corridor” for the base rate – from 8.25% to 8.00%. In addition, the central bank lowered the overnight deposit rate, which is the lower limit of that corridor, from 6.25% to 6.00%. These 25bp rate cuts were in line with market expectations.

According to the central bank’s post-meeting statement, policymakers noted that a “significant increase in real wages” and improving consumer confidence were two of the factors contributing to growing household consumption in the first quarter, though they noted that a “general decline in investment” weighed on the economy’s growth potential and that “tightness” in the jobs market “has eased” in recent quarters.

Regarding inflation, policymakers claimed that the “short-term outlook for inflation has improved” amid expectations that better-than-expected economic data and falling oil prices “will result in a lower inflation path in 2024” versus the central bank’s March forecast. However, they still expect the decline in core inflation to stop in the second quarter, with core inflation rising close to 5% by the end of the year. In addition to an improved short-term inflation outlook, central bank officials acknowledged that “the incipient recovery in Hungarian economic growth, historically high foreign exchange reserves, the persistent improvement in the current account balance and a cautious approach to monetary policy” are factors that are improving the country’s risk perception.

Despite these positives, policymakers concluded that volatile financial markets, “significant” geopolitical tensions and inflation risks “continue to warrant a careful and patient approach” toward monetary policy. As a result, they agreed to reduce rates by -25bp, a smaller reduction than the -50bp cuts in May. They also emphasised that they are “constantly assessing incoming macroeconomic data” as well as “the outlook for inflation and developments in the risk environment” and that they will make future interest rate decisions “in a cautious and data-driven manner.”

In Turkiye, in the wake of the local elections in March – in which President Recep Tayyip Erdogan’s Justice and Development Party experienced a decrease in voter support – T. Rowe Price sovereign analyst Peter Botoucharov believes that the process of political normalisation appears to be a key part of Erdogan’s policies, and importantly seems to have taken priority over involvement in economic policymaking. Earlier in the week, the President called for an end of domestic political tensions and hoped for a “constructive, positive and unifying political atmosphere.” This follows several Erdogan meetings with opposition leaders in which they exchanged views on social, economic and geopolitical issues.

The ultimate motives for this rapprochement are not fully clear: it could be a desire to change the constitution so that Erdogan can run again for President or an attempt to create rivalry between opposition parties. However, Botoucharov believes that any moves toward a more democratic society would be beneficial for Turkey.

Last week, the Bloomberg Global Aggregate Index (hedged to USD) returned -0.1% (0.5% YTD), Bloomberg Global High Yield Index (hedged to USD) 0.1% (3.9% YTD) and Bloomberg Emerging Markets Hard Currency Aggregate Index was little changed (2.1% YTD).

The lacklustre retail sales data appeared to push longer-term US Treasury yields lower, but Friday’s stronger S&P Global PMI readings brought them back up to end the week modestly higher. The yield on the benchmark 10-year Treasury note rose 4bp to 4.26% from 4.22% (up 38bp YTD). The 2-year Treasury yield increased 2bp to 4.73% from 4.71% (up 48bp YTD).

Issuance in the US investment-grade corporate bond market was also heavy early in the week, with expectations for total weekly issuance surpassed by the end of the day Tuesday. Somewhat improved investor sentiment and equity gains supported the performance of high yield bonds. Signs that the economy could be slowing, along with encouraging comments from Fed officials about the likelihood of a rate cut later this year, seemed to bolster the performance of risk assets overall.

Over the week, the 10-year German bund yield rose 5bp, ending the week at 2.41% from 2.36% (up 39bp YTD).

In the UK, the 10-year gilt yield increased 3bp, ending the week at 4.08% from 4.05% (up 55bp YTD).

Yoram Lustig, CFA
Head of Multi Asset Solutions,

Michael Walsh, FIA, CFA
Solutions Strategist


Eva Wu,
Solutions Analyst


202406 - 3660689

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