For the week the S&P 500 added 1% and the Nasdaq rose 2%. The Dow Jones was up 0.7% and logged a 13-day winning streak on Wednesday, its longest run since 1987. Growth stocks outperformed value with particular strength in technology. Alphabet and Meta both reported accelerated sales growth and saw their shares gain over 10% for the week.
Data for the week raised hopes that we will see a soft landing in the US. On Friday the Fed’s preferred inflation gauge, the core personal consumption expenditure index eased to 4.1% in June on an annualised basis, lower than expected and a 20-month low. Furthermore, wage growth increased by a slower than expected pace. The Commerce Department reported that second quarter GDP rose 2.4%, up from 2% in the prior quarter and higher than expected. The week also saw the Fed raise interest rates by 25 basis points, taking it to a 22-year high as widely expected. With the latest inflation data markets are growing more hopeful that there will be no further rate hikes this year. US Treasury yields gained for the week with the 10-year yield ending at 3.96%.
The European Central Bank also raised rates by 25 basis points, its ninth consecutive hike and taking it back to the record high last reached in 2001. President Lagarde indicated policymakers were keeping an open mind for future meetings and decisions would be data dependent. For the week the pan-European STOXX 600 was up 1.2% and had hit a 17-month high after the ECB meeting, where there are growing hopes the central bank is near the end of its tightening cycle. There were still some areas of concern. Spain’s election over the weekend was inconclusive and could provide some uncertainty. On the data front, the eurozone Composite PMI dropped to an eight-month low of 48.9 in June, while German economic growth stagnated in the second quarter. Nevertheless the German DAX index managed to reach a record high.
Japan’s Nikkei 225 added 1.4% for the week, with the yen strengthening against the US dollar. The Bank of Japan concluded its policy meeting on Friday and announced a tweak to its yield curve control policy giving it greater flexibility. In response the yield on the 10-year Japanese government bond rose as high as 0.575%, its highest level in almost nine years. Chinese equity markets were the best performers of the week, with the Shanghai Composite up 3.4% and the Hang Seng surging 4.4%. Stocks were supported by the Politburo meeting where it acknowledged that the economic recovery was making “tortuous progress” and pledged to help expand domestic demand. Details were sparse but stocks were hopeful that further stimulus would come, with property stocks some of the largest gainers.
The value of your investment can fall as well as rise in value, and the income derived from it may fluctuate. You might get back less than you invest. Currency exchange rate fluctuations can also have a positive and negative affect on your investments. Please note that EFG Harris Allday does not provide tax advice. Past performance is not a reliable indicator of future performance.
This document has been produced by the EFG Harris Allday research team utilising data from documents produced by EFG Asset Management (UK) Limited for use by the EFG group and the worldwide subsidiaries and affiliates within the EFG group. EFG Asset Management (UK) Limited is authorised and regulated by the UK Financial Conduct Authority, registered no. 7389746. Registered address: EFG Asset Management (UK) Limited, Park House, 116 Park Street, London W1K 6AP, United Kingdom, telephone +44 (0)20 7491 9111.