US equities advanced, albeit with thin trading during a holiday shortened week. Signs of a slowdown in the US economy raised expectations that the Federal Reserve would begin cutting interest rates in September, which in turn provided a boost to growth stocks. ISM’s manufacturing purchasing managers’ index (PMI) remained in contractionary territory in June, while the services PMI also slipped below the 50-level. Jobs data were mixed but generally pointed to a cooling; Friday’s non-farm payrolls report saw 206,000 jobs added last month, down 12,000 while the unemployment rate ticked up to 4.1%.
For the week, the S&P 500 was up 2%, closing at a record high. The Nasdaq Composite also ended at a new record, jumping 3.5% while the weekly gain of the Dow Jones Industrial Average was more contained at 0.7%. Technology stocks were some of the best performers, with Tesla gaining 27% for the week, its strongest performance since January 2023 and pushing it back into positive territory for the year. US Treasury yields were lower for the week given the economic data, with the 10-year Treasury ending at 4.278% after two weeks of gains.
Politics was in the spotlight in Europe. France’s CAC 40 rose 2.6% for the week as there was a sigh of relief that the far-right National Rally party did not win an outright majority it the first round of voting. There was however a slight pullback on Friday in equities, while government bonds rallied, as uncertainty crept back in ahead of the second round of voting on Sunday. Meanwhile in the UK, the Labour Party won a landslide victory, ending 14-years of Conservative leadership. The blue-chip FTSE 100 slightly fell on Friday with a strengthening pound after the result, however for the week it saw a small gain of 0.5%. The pan-European STOXX 600 added 1%.
It was a week of fresh highs for Japanese equities. The Nikkei 225 added 3.4% while the Topix was up 2.7%, managing to secure a record high for the first time since December 1989. Ongoing weakness in the yen has helped the indices scale new heights. The Topix snapped a five-day winning streak on Friday, with household spending unexpectedly falling in May. Chinese markets were amongst the few decliners of the week, given weaker data raising concerns about the span of the economic rebound.
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.