Weekly Market Commentary

Week ending 7 June 2024

Weekly Market Commentary

Week ending 7 June 2024

Welcome to our weekly market update. Our focus is on providing clear, concise insights into stock and bond market movements and the broader economic landscape.

The views expressed here are subject to change without notice and we can’t accept any liability for any loss arising directly or indirectly from any use of it. This is for your information only. It is not a recommendation or advice, if you’re unsure about anything please speak to your financial adviser.

This week’s highlights

• Rate cuts begin: European and Canadian central banks cut rates as expected.

• Nvidia overtakes Apple: becoming the second largest company in the world.

• Significant volatility in India and Mexico: following unexpected election results.

Market Review

The key themes this week for investors were rate cuts, continued Artificial Intelligence (AI) optimism and mixed signals on the strength of the US economy. As expected, both the European and Canadian central banks cut rates to 3.75% and 4.75%, respectively. The European Central Bank (ECB) delivered their first positive rate cut since 2019. President Lagarde stated that the Eurozone is now at a disinflationary stage, however she also acknowledged the road could be bumpy and they’ll remain data dependent when considering future moves. Market pricing suggests a further cut is more likely in September than July.

Again, this week big tech companies pushed US equity indices to new highs. Nvidia has now claimed Apple’s spot as the second largest company in the world, surpassing $3 trillion in market cap. Recent US

employment data continues to hint at mild softening in the jobs market which investors seem to like. This creates a potential for precautionary Fed cuts to come a little sooner. As part of this, developed market bond yields have fallen 0.1%-0.2% this week with the US 10yr now at 4.3%.

Unexpected election results in India and Mexico caused significant volatility in their equity markets. However, investors soon became more comfortable with the results and later in the week most of the losses and effects were reversed. We may see more political volatility in 2024 as a number of elections remain.

Outlook

The outlook remains consistent with previous weeks as we see most central banks remain firm in their need for decreased inflation before possibly cutting rates in the second half of 2024. As always, employment, activity and inflation data over the next few months will be critical to the evolution of their thinking. There is however now some encouragement for the Eurozone with the ECB cutting rates for the first time since 2019 but the outlook ahead remains bumpy.

Chart of the Week

What This Means for You

Again, this week we’ve seen a number of different elements impact market sentiment and performance. More positive earning figures, but higher than expected jobless claims being reported in the US and positive signs on Gross Domestic Product (GDP) coming out of Europe all featured. Evidence remains clear that maintaining a welldiversified, long-term thinking to your investment approach rather than reacting

to market swings is key. By staying committed to carefully considered plans, investors can navigate through periods of volatility and uncertainty.

Has provided the commentary within this document.

Need Help?

If you have any questions in relation to this document, please discuss them with your financial adviser.. – we look forward to hearing from you.

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PLEASE NOTE THE FOLLOWING

This guide is for general information and is not intended to address your personal and financial requirements and should not be deemed or treated as constituting financial advice. Nor does this guide constitute tax or legal advice and should not be relied upon as such. Tax treatment of investments and legal advice depends on the individual circumstances of each client and may be subject to change in the future. For further guidance on the matters discussed in this guide please speak to Shane Fox, who is a regulated financial adviser. Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets beyond our control. Investments and the income from them may go down as well as up and you may get back less than the amount invested. Past performance cannot be used as a reliable prediction of future performance.

Principle Financial Services Ltd is an Appointed Representative of New Leaf Distribution Ltd. who are authorised and regulated by the Financial Conduct Authority. Number 460421.

SAMANTHA HAGON