Monthly Market News June 2024 – Market trends

Alexandre Gauthy - Economist

Equity markets performed well in June and were once again driven by the US technology sector. European stocks lagged due to political uncertainty in France. Our expert, Alexandre Gauthy, analyses the trends in the markets in June 2024.

Equity markets: the return of the "magnificent 7"

Global equities rose about 3% in June. Emerging markets and US equities both posted a positive performance of around 5%. In contrast, European equities fell in June due to political uncertainty in the region. The S&P 500 Index and Nasdaq posted their second consecutive monthly gain and fifth gain in the first six months of the year. Strong gains in the U.S. technology sector were key contributors to market performance, including Nvidia (+12.6%) and Apple (+9.6%). The rest of the market lagged behind, with the equal-weighted S&P 500 and smaller market caps ending the month down 1%, putting the spotlight back on market concentration and pockets of high valuations (Nvidia, semiconductors, artificial intelligence-related stocks).

In June, disinflation continued in the United States and macroeconomic data continued to support the thesis of a soft landing for the US economy. Inflation figures for May were weaker than expected. Core inflation excluding housing reached only 1.9% year-on-year, the lowest point since March 2021.

Investors' attention has also been focused on slowing economic growth. Data such as the weakness of the ISM manufacturing index in May, the stagnation of capital goods orders as well as the activity of the housing market pointed to a deceleration in economic growth compared to the pace at the beginning of the year.

Bond markets: France's spreads widen

Yields on risk-free government bonds (Germany, US) fell following better news on the US inflation front and slowing economic indicators. Spreads of France and Italy rose due to political uncertainties in France. During the month, euro-denominated corporate bonds returned 0.66%, compared to 0.37% for eurozone government bonds.

Central banks: a first ECB rate cut

The European Central Bank cut its key interest rate by 0.25% in June, bringing the deposit rate to 3.75% in a move widely anticipated by the markets. President Lagarde said at the press conference that it was "very likely" that the ECB had entered the phase of “reducing” its restrictive monetary stance. She put emphasis on the fact that the direction of falling policy rates needed to be validated by the data.

The Fed played the patience card and kept its key rate unchanged. The median projection of Fed members now calls for only one 25 basis point rate cut this year, down from the projection of three cuts in March.

Currencies: the euro impacted by political uncertainty

The dollar appreciated somewhat against the euro in June due to political uncertainty in France. The increase in the probability of D. Trump being elected following J. Biden's poor performance in the presidential debate also supported the greenback. The yen continued to depreciate against the euro and the dollar. During the month, the Swiss franc was volatile. Finally, the euro appreciated by more than 5% against Latin American currencies in June (Mexican peso and Brazilian real).

Commodities: Rebound in oil prices

Earlier this month, the price of oil fell due to the surprise announcement of OPEC+, which will start reducing its production cuts later in the year. In the second half of the month, oil prices rebounded, closing June up nearly 6%. Gold prices were broadly unchanged during the month after their recent good performance.

Share the article

More about: