Global equity markets saw mixed movements, influenced by key testimonies, economic data, and political events. The US markets reached new highs as Federal Reserve Chair Jerome Powell hinted at potential policy shifts. Asian markets rose on hopes of lower US interest rates, despite trade concerns with China. In Europe, political uncertainties and election outcomes affected market performance, with notable impacts in France and the UK.
US Equities Market
The S&P 500 climbed to an all-time high, while the Nasdaq Composite rose with strong performance from Nvidia, Microsoft and Apple. In his semiannual monetary policy update, Powell emphasized the need for caution, stating that "Reducing policy restraint too late or too little could unduly weaken economic activity and employment." This comment suggested a potential shift in the Federal Reserve's approach to interest rates, with Powell expressing confidence that good data would indicate inflation is moving towards the 2% target. This gave an additional boost to the stock market confidence on top of strong rally in the AI tech stocks.
Adding to the market's complexity was President Biden's recent debate performance, which some analysts viewed as a failure. Concerns arose about how this might influence the upcoming election and potential policy changes. Market uncertainty could increase if investors start doubting Biden's chances of re-election, possibly leading to heightened volatility in the stock market as traders speculate on future economic policies and leadership.
Asia Equities Market
Asian stocks mostly increased, driven by expectations of lower U.S. interest rates. Japan's Nikkei 225 hit a record high, buoyed by technology stocks, especially chipmakers, and the weakening yen. Foreign investment surged due to the yen's weakness and the Bank of Japan's dovish stance. However, Chinese markets lagged and fell by 5% amid trade war concerns following the EU's imposition of steep tariffs on Chinese electric vehicles. Investors watched for possible retaliation from Beijing, as optimism over China's economic rebound waned with underwhelming economic data.
Europe Equities Market
European shares showed mixed results due to political uncertainty and slow growth. French stocks dropped as investors faced taxing negotiations following a surprising left-wing surge in elections, which blocked the far-right's advance. In the UK, stocks and the pound rose after a Labour Party landslide victory, which provided clarity and stability to the equity markets. The new Labour government faces challenges, including high taxes, debt levels, and stagnating living standards, as it aims to revive economic growth.
Global equity markets experienced varied performances, influenced by key economic and political factors. In the US, investors responded to Powell's testimony with cautious optimism. Asian markets benefited from expectations of lower US interest rates but were held back by trade tensions involving China. European markets were affected by political developments, with notable impacts in France and the UK. Overall, these factors reflect the interconnected nature of global financial markets and the ongoing challenges they face.
Portfolio Evaluation
The portfolio rallied on news of strong earnings from tech companies and consistent growth in the US economy. The Cash portfolio gained +3.44%, CPF-OA +4.54%, SRS +3.92%. We have switched into India fund this month and it has performed strongly at 6.6% return. On the other hand, China funds are down 5% for this month. We also rebalanced the portfolio to take profit from our outperforming US funds as the valuations are creeping towards the expensive zone. However, this doesn't mean that the rally is over though I will expect a short term correction soon and more moderate returns in the coming months.
Click here for the Fund Factsheet for Jun 2024
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