Bassanese Bites: 1, 2 or none? – June 11 2024
Global markets – week in review
Global stocks bounced back last week after a 2-week mini-consolidation – reflecting rates cuts in Europe and Canada along with some softer-than-expected US data that raised hopes the Fed would also cut rates later this year. Overnight, the S&P 500 pushed on to another record high.
Overall US economic data last week could be characterised as mixed. A soft US manufacturing survey and a larger-than-expected drop in job openings raised hopes early in week that the economy was slowing by enough to allow the Fed to cut rates potentially as early as September.
Also supporting market sentiment was confirmation of already anticipated rate cuts in Canada and Europe. With weaker growth and lower inflation, neither the Bank of Canada nor the European Central Bank saw reason to keep waiting for the Fed to go first – an indulgence the RBA can’t yet follow due to stubbornly higher core inflation.
All that said, the week was not without setbacks. Friday’s US payrolls report was stronger-than-expected, with a solid 272k jobs again and firm 0.3% growth in average hourly earnings, partly offset by a small increase in the unemployment rate to 4%. Another strong showing by far right parties in European elections – and France’s decision to hold a snap national election as a result – also unnerved investors over the weekend. The ECB also likely only cut rates because it felt boxed in to deliver what it has long promised – as it then raised its inflation forecast and attempted to play down the chance of further cuts any time soon.
