This week's global market update covers the performance of U.S. small-caps and tech stocks, European bond yield movements, Japan's export-driven gains, China's economic concerns, and key developments in other markets like the Czech Republic and Turkey.
United States
- Most major U.S. stock indexes posted gains in a light news week, with small-cap companies and information technology stocks performing best.
- The banking sector drove the KBW Bank Index to a strong performance due to favorable regulatory news and stress test results.
- May data for the core personal consumption expenditures (PCE) price index showed a 0.1% rise from April, indicating a potential September Fed rate cut.
- Yields on longer-term Treasuries increased, leading to a steeper yield curve.
- Municipal bond yields increased amid heavy issuance and rising Treasury yields, while investment-grade corporate bond issuance met expectations.
- In the high yield bond market, positive flows and moderate issuance contributed to favorable conditions.
Market Indexes Changes
- DJIA: 39,118.86 (-31.47, 3.79% YTD)
- S&P 500: 5,460.48 (-4.14, 14.48% YTD)
- Nasdaq Composite: 17,732.60 (43.24, 18.13% YTD)
- S&P MidCap 400: 2,930.09 (-1.77, 5.34% YTD)
- Russell 2000: 2,047.69 (25.66, 1.02% YTD)
Europe
- The pan-European STOXX Europe 600 Index ended 0.72% lower amid political uncertainty in France and the UK.
- Major stock indexes were mixed: Germany’s DAX rose 0.40%, Italy’s FTSE MIB fell 0.46%, France’s CAC 40 Index lost 1.96%, and the UK’s FTSE 100 Index eased 0.89%.
- Eurozone government bond yields rose ahead of inflation data and elections, with the yield spread between French and German debt widening.
- Inflation slowed in France and Spain, driven by slower increases in fuel and food prices.
- Germany faced rising unemployment and weakening business confidence, while Eurozone confidence data were mixed.
Japan
- Japan’s stock markets rose, with the Nikkei 225 Index gaining 2.6% and the TOPIX Index up 3.1%, supported by a weak yen.
- The yen hovered around its lowest levels in 38 years, and the 10-year Japanese government bond yield rose to 1.06% on expectations of further monetary policy tightening.
- Tokyo-area core consumer price index for June showed a 2.1% year-on-year rise, driven by services inflation.
- Retail sales and industrial production grew more than anticipated in May.
China
- Chinese stocks weakened due to a light economic calendar and concerns about the slowing economy.
- The Shanghai Composite Index and the CSI 300 Index recorded slight declines, while Hong Kong’s Hang Seng Index slid 1.5%.
- Industrial profits at large companies edged up 0.7% in May, down from April’s 4% gain.
- Foreign selling contributed to the week’s declines, with global funds selling about RMB 49.4 billion of onshore shares in June.
Other Key Markets
- Czech Republic: The Czech National Bank cut its main policy rate by 50 basis points to 4.75%, reflecting recent economic weaknesses and a downside inflation surprise.
- Turkey: Turkey’s central bank kept its key interest rate at 50.0%, citing the "lagged effects" of previous monetary policy tightening and ongoing inflationary pressures.
