A WEEK IN FINANCIAL MARKETS

In the UK, the FTSE 100 fell almost 2% on Thursday to close out its worst month since the early days of the Covid pandemic with the Index falling more than 5% over the month of June.

US equities rebounded to break a four-day skid in a thinly-traded Friday session that featured multiple flips between gains and losses as investors continue to worry that the economy may be headed for a recession.

US equity futures fell and Asian stocks trimmed gains on Monday as slowing economic growth and sticky inflation continued to handicap markets. Bonds rose in New Zealand and Australia, while Treasury futures were little changed — there’s no cash trading due to the US break. The Dollar was firm, oil fluctuated around $108 a barrel and Bitcoin retreated towards the $19,000 level.

The S&P 500 Index closed up 1.1%. All of the 11 major industry groups gained, with the utilities, consumer discretionary and real estate sectors leading gains. The tech-heavy Nasdaq 100 Index rose 0.7%, while the Dow Jones Industrial Average increased 1.1%.

The bounce in stocks provided some much needed reprieve for investors enduring a historically bad start to the year. The S&P 500 wrapped up its worst first-half in more than 50 years on Thursday, while the Nasdaq 100 is off to its worst start to a year since 2002. Despite the late rebound, both Indices finished the week lower for the fourth time in the last five. Investors now head to a three-day weekend, with the market closed on 4 July for the US Independence Day holiday. 

In the US and elsewhere, signs of economic weakness are becoming more apparent in everything from personal spending to manufacturing. Investors are increasingly fretting about recession and its implications rather than focusing exclusively on elevated price pressures.

Market consensus continues to drift towards our view that a recession is on its way. Markets have partially discounted this scenario with valuation having retreated. Earnings expectations are likely to come under pressure, so it is important to have a core portfolio that focuses on businesses with earnings that are resilient in the face of tougher economic conditions.

Stocks:

  • S&P 500 futures fell 0.50% as of 7 am in London. The S&P 500 rose 1.10% Friday
  • Nasdaq 100 futures fell 0.60%. The Nasdaq 100 rose 0.70% Friday
  • Japan’s Topix Index rose 1.30%
  • Australia’s S&P/ASX 200 Index increased 1.20%
  • South Korea’s Kospi Index shed 0.50%
  • Hong Kong’s Hang Seng Index fell 0.40%
  • China’s Shanghai Composite Index added 0.20%
  • Euro Stoxx 50 futures rose 0.70%

Currencies:

  • The Bloomberg Dollar Spot Index was steady
  • The Euro was at $1.0433, up 0.20%
  • The Japanese Yen was at 135.30 per Dollar, down 0.10%
  • The offshore Yuan was at 6.6926 per Dollar

Bonds:

  • The yield on 10-year Treasuries declined 13 basis points to 2.88% Friday
  • Australia’s 10-year yield declined eight basis points to 3.53%

Commodities:

  • West Texas Intermediate Crude rose 0.40% to $108.85 a barrel
  • Gold was at $1,812.82 an ounce, up 0.10%

Markets:

  • S&P 500 Index up 1.10%
  • Dow Jones Industrial Average up 1.10%
  • NASDAQ Composite Index up 0.90%
  • Russell 2000 Index up 1.20%
  • 11 of 11 main S&P 500 sectors closed higher
  • Utilities up 2.50%
  • Consumer discretionary up 2.00%
  • US Generic Govt 10-Yr down 4.40%
  • Bloomberg Dollar Spot Index (Rebased Version) down 0.40%

Stocks:

  • S&P 500 futures fell 0.50% as of 7 am in London. The S&P 500 rose 1.10% Friday
  • Nasdaq 100 futures fell 0.60%. The Nasdaq 100 rose 0.70% Friday
  • Japan’s Topix Index rose 1.30%
  • Australia’s S&P/ASX 200 Index increased 1.20%
  • South Korea’s Kospi Index shed 0.50%
  • Hong Kong’s Hang Seng Index fell 0.40%
  • China’s Shanghai Composite Index added 0.20%
  • Euro Stoxx 50 futures rose 0.70%

Currencies:

  • The Bloomberg Dollar Spot Index was steady
  • The Euro was at $1.0433, up 0.20%
  • The Japanese Yen was at 135.30 per Dollar, down 0.10%
  • The offshore Yuan was at 6.6926 per Dollar

Bonds:

  • The yield on 10-year Treasuries declined 13 basis points to 2.88% Friday
  • Australia’s 10-year yield declined eight basis points to 3.53%

Commodities:

  • West Texas Intermediate Crude rose 0.40% to $108.85 a barrel
  • Gold was at $1,812.82 an ounce, up 0.10%

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