Global equities succumbed to a modest loss last week whilst bond yields edged higher. US markets were flat; the S&P 500 posting a positive return of just three basis points, whilst European markets closed marginally lower.

The Federal Reserve released the minutes of its May 1st meeting with the detail somewhat more hawkish than markets expected, countered by a dovish tone in the subsequent press conference as Fed Chair Jerome Powell played down the prospect of further rate hikes. Markets are currently fully pricing in only one rate cut before the end of the year. From a week ago, the yield on benchmark 10-year US Treasuries rose 5 basis points to 4.47% at Friday’s close, having spiked during the week on the release of preliminary purchasing managers’ indices (PMI) for May which jumped to the highest composite reading in two years.

In the UK, Prime Minister Rishi Sunak on Wednesday unexpectedly called a general election for July 4th, despite his Conservative Party is trailing badly in opinion polls. Sunak isn’t required to hold an election until January.  Prior to this, UK inflation data showed a drop in the Consumer Price Index (CPI) to just 2.3%, though this was smaller fall than forecast.   June rate cut expectations at the Bank of England have been increasingly priced out and the election date effectively confirms that the earliest opportunity for a lower interest rate will now be the August policy meeting. 

The price of a barrel of West Texas Intermediate crude oil slipped nearly $2 to $77.25. European gas prices meanwhile saw a significant jump as concerns over Russian supply cuts resurfaced. Austrian energy company OMV warned there was a risk that Russian pipeline flows to Austria could be halted after a court ruling could block payment for natural gas delivered by Russia’s Gazprom. Russia supplies more than 90% of Austrian gas which is significantly greater than the average EU country with many others having stopped purchases since the energy crisis in 2022.

Week Ahead

Source: Refinitiv Workspace, 28/05/24

Past performance is not indicative of future performance.

The value of an investment may fall as well as rise. You may get back less than the amount invested.

The value of investments may fall as well as rise purely on account of exchange rate fluctuations.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2024. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group
does not promote, sponsor or endorse the content of this communication.

© S&P Dow Jones LLC 2024. All rights reserved

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.

Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.

Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.

SJP Approved 28/05/2024