This boosted expectations of a rate cut from the Fed in September and helped support stocks at the start of the session, however the positive momentum fizzled out with investors also weighing political uncertainty following Biden’s weak performance in the first presidential debate.
The Nasdaq Composite fared the best for the week, up 0.2% in its fourth week of gains, as technology stocks continued to outperform, having driven most of the gains in the first half of the year. The S&P 500 ended marginally lower for the week but remained close to all-time highs and notched monthly and quarterly gains. The Dow Jones also dropped less than 0.1% for the week, weighed down by losses in Nike, with shares dropping nearly 20% on Friday after it issued a gloomy outlook. While shorter dated Treasury yields were lower on expectations of a September rate cut, longer-dated Treasuries ticked higher. The 10-year yield ended at 4.37% for the week and notched another quarterly rise.
European markets had a downbeat week amid political uncertainty. Over the weekend the first round of voting in the French parliamentary election took place, with the CAC 40 losing almost 2%, taking its quarterly loss to 8.8%, underperforming other European peers. Meanwhile the risk premium on French government bonds reached its highest level since 2012. The UK FTSE 100 was down 0.9% for the week while yields rose, with UK voters heading to the polls this week. One brighter spot was Germany, with the DAX index up 0.4% even with underwhelming economic data points. The pan-European STOXX 600 fell 0.7%, seeing a quarterly loss.
Japan’s equity indices posted solid gains amid yen weakness. The Nikkei 225 was up 2.6% while the Topix added 3.1% and it managed to hit a 34-year high. Attention remained on the Japanese currency which weakened past 160 per US dollar, raising speculation as to whether there would be any intervention into foreign exchange markets. Japanese bond yields rose of increased expectations of further policy tightening from the Bank of Japan. In China, stocks notched weekly losses with ongoing concerns about the state of the economic recovery.
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.