Market Pulse: Mid June 2024

Markets rebound healthily in May, as the market chooses to interpret the Fed's overtures as dovish. Donald Trump's day in the sun came to a close, and unsurprsingly, an appeal will be launched.

Equity Markets:

US markets posted a firm riposte to April's dip, with the S&P 500 gaining 5.0%, the Dow Jones Industrial Average up 2.6%, and the NASDAQ surging 7.0%. Europe indices were solid too, as the Euro Stoxx 600 rose 4.0%, reflecting improving economic activity. South East Asia and emerging markets were also paying attention, with the Nikkei returning 3.5% and broad gains in EM, with the MSCI Emerging Markets Index advancing 3.8%.

Sector Performance

Best Performers: We have flagged the significant underperformance of defensive assets previously, yet for all the AI driven headlines, it was Utilities which actually led the charge, gaining 9.0% - second straight month of strong gains. Whilst, tech related sectors Nasdaq and communication services were up circa 7.0% each, we should be conscious of a potential change in leadership and the implications of that.

Worst Performing Sectors: Energy stocks, sympathetic to an ailing oil price, fell by -1.2% and then came Consumer Staples, a positive return of +1.5% but lagged behind broader market rally.

Central Bank Announcements and Geo-Politics:

Federal Reserve: Minutes from the May FOMC meeting indicated a cautious approach to potential rate cuts, with concerns about persistent inflation. It would appear June's anticipated cut is firmly off the table, with small odds of a July cut at this point in time. The ECB telegraphed it expected to ease rates in the upcoming meeting, but would be on hold thereafter. All eyes on the Japanese monetary authorities, as Japanese government bond yields rise, monetary policy will likely have to follow.

Donald Trump was convicted on 34 counts of falsifying business records, yet in the aftermath, campaign convictions soared - with it, several prominent billionaires announced support for his campaign. Generally, it is felt that Trump would be good for the stock market, yet perhaps the bond market this time would question the budgetary finances, much as the UK's Liz Truss' government had to contend with.


Precious metals have continued their tare, and Gold closed the month at .2324 USD, having given up nearly 100 USD from the highs of the month though and Silver closing above 30 USD, but well off the 32 USD seen during May. It will be interestingly to see how trading goes in the early days of June - have we seen a major breakout in Silver, or a classic bull trap that reverses sharply? Platinum has not performed well in recent weeks and may yet be the canary in the coalmine.

Crude Oil saw prices falling, with WTI crude down 3.1% to $80.90 per barrel. Positioning in the futures market is becoming very bearish indeed, as oil approaches some important support levels. Ag's have rallied hard in line with the precious metals, concerns over the Russian wheat crop have supported the move, although it does appear to be a short squeeze of sorts and likely short lived.


US Dollar remains in a range whilst markets look for a clearer take on the future of interest rates. Generally, we remain in a holding pattern until that time. Whilst the Chinese Yuan looks ready to weaken further against the US Dollar, the Yen seems to be a move in waiting - the carry trade particularly in EM currencies could unwind in a sharp fashion if the Bank of Japan were to finally commit to tighter policy.

Expectations are building for a June tapering of the BoJ bond buying and 10 year government bond yields have broken 1% on the upside, and given their outsized influence on fixed income markets, investors have more than a passing interest in what comes next.


May saw a very strong return to form after April's sell off. Generally, this may well herald a more volatile period throughout the summer - depending on how 'sticky' inflation becomes. The markets had begun to price in a 'rate cutting' cycle, yet any disconfirming news flow will call that into question and inevitably introduce a more volatile period. Nominal growth in the US seems to be holding, all supportive of equity markets, yet any wobbles in the fixed income market will ultimately mean the stock market might lose its sure footedness.

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