This week, global markets faced a mix of economic data and geopolitical tensions. Key highlights include a shift towards value and small-cap stocks in the U.S., a decline in European markets, Japan's economic fragility, and China's mixed economic performance.
United States
- Market Indexes Changes:
- DJIA: 40,287.53 (+286.63, 6.89% YTD)
- S&P 500: 5,505.00 (-110.35, 15.41% YTD)
- Nasdaq Composite: 17,726.94 (-671.51, 18.09% YTD)
- S&P MidCap 400: 3,015.30 (-5.41, 8.40% YTD)
- Russell 2000: 2,184.35 (+36.08, 7.76% YTD)
- Investors Turn to Value and Small-Caps:
- The Dow Jones Industrial Average outperformed other indexes.
- Value stocks outpaced growth stocks by 477 basis points, the largest divergence since March 2023.
- Chip stocks declined sharply following potential U.S. export curbs on semiconductor technology to China.
- Economic Data:
- Retail sales (excluding gas and auto) jumped 0.8% in June.
- Building permits rose 3.4% in June.
- Industrial production increased 0.6% in June.
- Philadelphia Fed's regional business conditions gauge reached a three-year high.
- Weekly jobless claims increased to 243,000, with continuing claims at 1,867,000.
- Fed Chair Jerome Powell's Speech:
- Powell noted a better balance between inflation and growth.
- The yield on the 10-year U.S. Treasury note fluctuated, ending higher due to Microsoft disruptions.
Europe
- Market Performance:
- STOXX Europe 600 Index: -2.68%
- Germany’s DAX: -3.07%
- France’s CAC 40: -2.46%
- Italy’s FTSE MIB: -1.05%
- UK’s FTSE 100: -1.18%
- ECB Decisions:
- ECB kept interest rates unchanged at 3.75%.
- President Christine Lagarde indicated a "wide open" decision for September.
- Economic Data:
- Household loan demand increased for the first time in two years.
- Industrial production in the euro area fell 0.6% in May.
- UK Economic Indicators:
- Headline annual inflation held at 2% in June.
- Core inflation remained at 3.5%.
- Average earnings (excluding bonuses) grew by 5.7% annually.
Japan
- Market Performance:
- Nikkei 225 Index: -2.7%
- TOPIX Index: -1.2%
- Economic Concerns:
- Speculation about Bank of Japan's potential interest rate hike.
- 10-year Japanese government bond yield fell to 1.04%.
- Yen strengthened to JPY 157.37 against USD.
- Economic Data:
- Core CPI rose 2.6% year on year in June.
- Overall inflation held steady at 2.8% year on year.
- GDP growth forecast lowered to 0.9% for the fiscal year ending March 2025.
China
- Market Performance:
- Shanghai Composite Index: +0.37%
- CSI 300: +1.92%
- Hang Seng Index: -4.79%
- Economic Data:
- GDP grew by 4.7% in Q2, below expectations.
- Retail sales increased by 2% in June.
- Industrial production rose 5.3% in June.
- Fixed asset investment up 3.9% in the first half of the year.
- Urban unemployment rate steady at 5%, youth jobless rate at 13.2%.
- Property Sector:
- New home prices fell 0.7% in June, extending losses for the 12th consecutive month.
Other Key Markets
- South Africa:
- South African Reserve Bank kept interest rates unchanged at 8.25%.
- Inflation outlook improved, but risks remain due to electricity and services price inflation.
- Brazil:
- Inflation in June was 0.21%, lower than expected.
- Core inflation measures were stable, enabling the central bank
