Market Update: 18 June 2024
Australia faced a challenging week as the ASX 200 dipped by 1.7%. Despite this downturn, there was a silver lining in the employment data, showing a drop in the unemployment rate to 4% with nearly 40,000 new jobs added in May, aligning with market expectations. This positive employment trend offers a glimmer of hope amidst the current market volatility.
In the United States, market movements were mixed but generally positive. The Nasdaq and S&P 500 rose by 3.2% and 1.6% respectively, driven by softer-than-expected CPI data for May. Headline inflation was flat month-over-month and increased by 3.3% year-over-year, reinforcing hopes that the Federal Reserve might cut rates this year. Despite these encouraging figures, the Fed maintained a cautious stance, leaving the target rate unchanged and projecting fewer rate cuts for 2024 but more for the subsequent years. This cautious optimism has led to increased market expectations for rate cuts in September and December.
European markets, on the other hand, experienced a turbulent week with political instability affecting investor sentiment. The Euro Stoxx 50, Euro Stoxx 600, and FTSE all saw declines due to a surge in support for far-right parties in the European Parliament elections and subsequent political uncertainty in France. Meanwhile, Asian markets had a mixed performance. The Hang Seng and Shanghai Composite faced losses amid concerns over China’s economic data and new European tariffs on Chinese EVs. In contrast, Japan’s Nikkei saw a modest gain of 0.3% as the Bank of Japan began to slowly reduce its extensive bond purchases, signalling a gradual retreat from its aggressive monetary policies.
Published 18/6/2024
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