However, stocks managed to pick up following the release of the consumer price index on Wednesday. Inflation, having come in hotter-than-expected for the previous months, matched expectations, with core CPI climbing 3.6% annually, the slowest pace since April 2021. The readings reaffirmed the soft landing scenario and revived hopes that the Federal Reserve will begin cutting interest rates later this year, helping to benefit growth stocks. Meanwhile easing inflation pushed Treasury yields lower.
On Thursday the Dow Jones crossed the 40,000 mark for the first time and managed to close above it on Friday, seeing a weekly advance of 1.2%. The S&P 500 rose 1.5% and the Nasdaq Composite was up 2.1%, both reaching fresh highs over the week. Aside from the inflation focus, another notable occurrence was meme stocks springing back into life on the return of “Roaring Kitty” to social media platform X. However, unlike the 2021 phenomenon gains were relatively short-lived, with GameStop also pressured after it announced that it would sell up to 45 million shares.
The pan-European STOXX 600 had been on a nine-session winning streak, rising to fresh highs, supported by solid company earnings, however the run ended on Thursday with investors pausing and reassessing the outlook for monetary policy. Nevertheless, the index was 0.4% higher for the week. The European Central Bank is widely expected to hike rates at its June meeting although there was a degree of caution, as board member Isabel Schnabel warned that back-to-back cuts did not seem warranted. The FTSE 100 ended slightly lower, snapping a three-week winning streak.
In Japan, the Nikkei 225 gained 1.5% for the week, even with disappointing GDP figures. For the first quarter the Japanese economy contracted 2%, worse than expected. Meanwhile the yen ended little changed against the US dollar on hopes of a reduction in the interest rate differential. The Hang Seng index jumped over 3% however on the mainland the Shanghai Composite ended roughly flat with mixed economic data. This was despite Friday’s announcement of measures aimed at supporting the troubled property sector. These included the People’s Bank of China scrapping a floor on mortgage rates as well as reducing the minimum down payment ratio.
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.