Momentum continued into Tuesday, when the index closed out a volatile but strong quarter. Indeed, the S&P 500 and Nasdaq Composite saw their strongest performances since 2020, up 15% and 21% respectively for the second quarter. They did however kick off the new quarter on more muted footing, with comments from Federal Reserve Chair Kevin Warsh weighing.
There were numerous data releases over the week, with the most attention being paid to Thursday’s non-farm payrolls report. The June print indicated that jobs growth had slowed in a big undershoot of expectations. This prompted traders to cut odds of a rate hike for the coming months. For the week the Dow Jones Industrial Average added 2.0%, closing at a record high and seeing its fourth consecutive weekly rise. While a pullback in chipmakers resumed and weighed on the Nasdaq, it was still up 2.1%. The S&P 500 rose 1.8% for the week, with most sectors logging gains although real estate, utilities and energy lagged. Treasury yields ticked up over the week with the 10-year note ending at 4.49%, although shorter-dated notes came under more pressure after the release of the jobs report.
European markets had a positive week, helped by the fact that the market rally broadened out beyond technology names. Overall, the pan-European STOXX 600 added 2.7%, its best performance since mid-May and securing a fresh record high. Sector wise, defence stocks led the weekly gains, with investors continuing to eye increased defence spending this year, compounded by Russia’s recent strikes on Ukraine. Germany’s DAX index also logged an all-time high and jumped 4.5%, while other regional indices saw weekly gains. Markets found support in easing inflation, with the eurozone consumer price index coming in lower than expected for June, while European Central Bank President Christine Lagarde stated that the risks to inflation and eurozone growth were now more balanced.
In Japan, the Nikkei 225 advanced 0.6%, although there was some profit taking in tech names which limited gains. The currency market was volatile with the yen reaching its weakest level in 40 years at 162.84 against the US dollar. On Thursday the yen sharply jumped, prompting speculation that authorities may have intervened to prop up the currency. Hong Kong’s Hang Seng climbed almost 3%, whereas on the mainland the Shanghai Composite saw a more modest 0.4% rise. There was support from the latest purchasing managers’ index data, while the People’s Bank of China launched overnight reverse repo operations. One notable decliner of the week was South Korea’s Kospi, dropping 3.8%. The index saw sharp moves falling nearly 10% across Wednesday and Thursday as investors pulled back from artificial intelligence names, although it did bounce back on Friday following rallies in heavyweights Samsung Electronics and SK Hynix.