Both the US consumer price index and producer price index came in lower-than-expected. For the week the Nasdaq Composite added 3.2%, setting a fresh closing high in each session while the S&P 500 rose 1.6%, also seeing fresh highs over the week before slightly sliding on Friday. Gains were primarily focused around technology stocks with ongoing enthusiasm over artificial intelligence, while other sectors saw more muted performance. Indeed, the Dow Jones Industrial Average declined 0.5% for the week.
Another key focal point for the week was the Federal Reserve policy meeting. The central bank held interest rates steady as widely expected. However, the median expectation from policymakers is for just one rate cut, having expected three in their last report. Despite this, traders increased the odds for a September rate cut. In response US Treasury yields have declined, particularly longer-dated bonds. The yield on the 10-year note ended the week at 4.21% from 4.43%.
European equities were lower for the week amid heightened political uncertainty. In the previous weekend’s European Parliament elections, far right parties had performed stronger-than-expected. In response to the gains seen by the National Rally (RN) party in France, President Macron called for a snap parliamentary election. RN is leading in the polls, causing concern over its heavy spending plans. France’s CAC 40 sank 6.2% in its worst week since 2022, with banks some of the worst decliners. French government bonds sold off, with the spread of the 10-year bond and its German equivalent reaching its widest level since 2017. For the week the pan-European STOXX 600 fell 2.4% with other regional indices also lower.
Japan’s Nikkei 225 rose 0.3% for the week, while the yen weakened against the US dollar. At its meeting on Friday the Bank of Japan announced that it would begin scaling back its bond buying programme however investors were left disappointed as details won’t be announced until the next meeting in July. Over in China, equity markets were weaker, with the Shanghai Composite falling 0.6%. Sentiment was hurt by softer Chinese inflation figures as well as the EU announcing additional duties on electric vehicles (EV) imported from China. This weighed on EV makers and sparked concerns of retaliatory tariffs.
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.