Global equity markets ended the second quarter on strong footing last week, underpinned by positive economic data from the US. The +2.4% rise in the S&P 500 was its strongest weekly performance since March with positive returns broad based across sectors. The technology centric NASDAQ index also continued to rise with its +32.0% six monthly return its best start to a year for four decades[1]. Last weeks gains came on the back of a series of encouraging US economic figures including slowing inflation as per the Personal Consumption Expenditures (PCE) price index which reduced to a 2 year low of 3.8% in May[2], strong new home sales growth and rising durable goods orders.
The positivity in the US spilled over into other markets with most major benchmarks advancing. In Europe, the MSCI Europe ex UK index added +2.3% with support coming from an additional slowdown in headline inflation on the Continent which fell by 60 basis points (bps) to 5.5% back in May[3]. The FTSE 100 and FTSE 250 added +0.9% and +2.0% respectively although both indices recorded negative returns during the second quarter. Moving to Asia, the Nikkei 225 in Japan continued its impressive start to 2023 with an additional +1.2% weekly uptick whilst in China, the Shanghai Composite advanced by a modest +0.1%.
As for commodities, oil prices inched modestly higher with Brent Crude concluding the week +0.5% higher. This was largely the result of concerns relating to supply with crude inventories in the US falling sharply during the prior week. Saudi Arabia also commenced its already flagged production cut programme with the country’s output trimmed by 1 million barrels per day from the start of July. Elsewhere, gold lost further ground with the precious metal declining by -0.4% to $1,916 an ounce. A combination of increased risk appetite and higher treasury yields remained a headwind despite further weakness in the US Dollar[4].
Week Ahead
Friday’s jobs report is the key release from the US to monitor this week with unemployment expected to have held broadly steady at 3.6% during June. The rate of job creation is forecast to have slowed from May’s surprise 339,000 with an additional 222,000 expected on this occasion. Other key releases to keep an eye on in the US include Purchasing Manger Indices (PMI’s) from the Institute for Supply Management and the minutes from last month’s Federal Reserve monetary policy meeting. Final PMI’s covering June are also due from both the Eurozone and the UK this week with the former also publishing retail sales figures. Following on from the Friday’s official government numbers, the private Caixin PMI reports are published in China this week. There are no major data releases from Japan on this occasion[5].
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[1] T. Rowe Price, 03/07/23
[2] Bureau of Economic Analysis, 03/07/23
[3] Eurostat, 03/07/23
[4] Refinitiv, 03/07/23
[5] Forex Factory, 03/07/23
SJP Approved 03/07/23