Week ending 19 July 2024
Technology stocks had a tough week in the S&P500: lagging behind their peers.
Weekly Market Commentary
Week
ending 19 July 2024
Recent data adds confidence for US inflation: there is now a potential of two rate cuts this year.
US Election Polls: some commentators are predicting a landslide win for Trump.
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.
Market Review
The usual top performers in the S&P500 had a torrid week, however that did not reflect all sectors. The information technology sector underperformed energy by as much as 9.5%. This was due, in part, by profit taking by some players in the market, such as hedge funds, moving money into other areas of the US index. It was also a reaction to fears of further US Government intervention to curb technological exports to China, threatening global technology companies. This was further compounded by rhetoric from the Trump camp that they’ll continue their campaign to clamp down on China if they win the election.
Fed chair, Jerome Powell, continued his messaging from last week, saying that recent data is adding confidence for inflation. Other speakers also suggested that recent cooler inflation readings warrant interest rate cuts. Currently, markets are pricing more than two cuts by December. The Bank of England faces more of a challenge as UK inflation came in at 3.5% for the year to June, lagging the progress seen across the Atlantic. Stickier inflation was also seen in the Euro area which highlights potential cracks appearing across regions.
Outlook
Central banks appear to be cautious to commit to imminent rate cuts, as the Fed acknowledge the need for further cooling in the labour market, and comments from the Bank of England highlighting concerns over the strength of inflation and wage growth. However, the message being telegraphed is when they will cut rather than if.
Chart of the Week
US Election Polls. After the attempted assassination of former president Trump, some commentators are predicting a landslide win for him which could shape a majority in both the senate and house. The chart below shows an average of all polls conducted on US election campaigns for 2016, 2020 and 2024. It highlights the trend change over 12 months of the difference between Trump and his opposite Democrat candidates. Trump is currently leading in the 2024 campaign by 2.5% but the shooting in
Butler, Pennsylvania hasn’t boosted his lead over Biden just yet. When you compare the lead with the last two campaigns, it is significantly higher and only in the 2020 campaign, where he consistently polled high negative numbers, did he lose office.
What This Means for You
With the latest updates seen across the globe, there’s continued evidence that maintaining a well-diversified, 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.
