top of page

Weekly Market Update (June 23, 2024)


HIGHLIGHTS

US equities hit all-time highs again, while some mega-tech and momentum stocks sold off on Thursday. Gold went up after the soft US economic data and rate cut from Swiss National Bank. Breakout in oil prices due to the bullish global demand projection.


Central Bankers: Bank of England decided to keep the rate unchanged as inflation is on track to achieve the 2% target. Swiss National Bank cut 25bps surprisingly, resulting in a decline in Swiss Franc. Japanese yen dropped again as inflation growth was less than expected. Markets are pricing a 42% chance of rate hike in Japan at July’s meeting.


Elections: The two US presidential candidates will have their first debate in the coming week. In eurozone, France's snap elections will be on 27 June and 7 July. The uncertainty in the markets is increasing, mainly driven by the upcoming elections, with the weak economic outlook such as declining business confidence and weakening purchasing managers’ index in Europe and France.


EM: The political risks are rising not only in DM (Developed Markets) but also in EM (Emerging Markets). Elections in India, Mexico and South Africa have increased pressure on local rates and triggered unwind in foreign exchange carry trades. The Chinese economy remains bifurcated. Exports are strong, while there are weaknesses in housing and credit markets, with inflation at a low level.

 
MARKETS

Nasdaq

17,689.36

+0.01%

S&P 500

5,464.62

+0.61%

Dow

39,150.33

+1.45%

10-Year

4.26%

+5bps

Brent

85.07

+2.99%

DXY

105.83

+0.29%

*Data as of market close. 5-day change ending on Friday.

 
VIEW FROM THE STREET

Equity

UBS: Election is likely to increase volatility in the markets, and investors should manage the risks carefully. In a scenario of Republican sweep of both Congress and White House, it will be favorable to the financial sector but unfavorable to consumer discretionary and renewables.


Standard Chartered: We recommend US and Indian equities. Other than that, we also add new long idea on Japanese banks. The short-term technical signal is weak, while we believe it is an entry to add exposure to an undervalued sector that is exposed to long-term recovery in Japan's economy and increasing net interest margins at banks.

Fixed Income

UBS: We expect bond yields to drop as markets shift the focus from the timing of rate cuts to how far the rate will drop. Positive returns from fixed-income products are expected by using a diversified strategy.


Standard Chartered: Historically, USD bond yields usually peak at the end of the rate hike cycle and fall near the start of the rate cut cycle. The magnitude will depend on the size of the cut but it is a good idea to lock in the yield today.

Economy

Barclays: Global macro backdrop is not unfavorable. We expect a steady global growth - the slowdown in China will be offset by the resilient growth in the US and India. Cyclical pickup is expected in Europe. Progress on inflation should allow for a slow easing cycle.


Bank of America: As US government debt is accumulating, there is pressure on the Fed to reduce interest rates by accepting a higher inflation target level. Other than raising the inflation target, they can reduce this pressure by ending the interest payment on bank reserves or increasing the bank reserve requirement.

 
KNOWLEDGE TRANSFER

GLP-1

Here's all you need to know about the Game-Changing Obesity Drugs.


 
DISCLOSURE

This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.



Comments


bottom of page