Most major U.S. stock indexes posted gains in a light news week during what seemed to be a bit of a lull in market activity ahead of Q2 earnings reports. Small-caps and Tech stocks performed best, with growth style outperforming value. The banking sector performed well as media reports said that the Fed is considering significantly lighter additional capital requirements for banks than regulators originally proposed in the wake of the regional banking crisis in March 2023. This good news was followed by the Fed’s announcement that all 31 of the large U.S. banks they stress tested remained above their minimum capital levels. The main macro number of the week was Core PCE inflation which showed that prices excluding food and energy rose 0.1% from April. In Europe, the STOXX Europe 600 Index ended 0.72% lower amid heightened political uncertainty in France as the snap election called by President Macron approaches. Eurozone government bond yields rose ahead of inflation prints in the eurozone. Japan’s stock markets rose over the week, with the Nikkei 225 Index gaining 2.6% and the broader TOPIX Index up 3.1%, as historic weakness in the yen continued to support the country’s export-heavy industries. Chinese stocks weakened as a light economic calendar and concerns about the slowing economy curbed risk appetite. Gold surged in H1, up over 13%, its second best year since 2016 (only 2020 was better). Oil also had a strong H1 thanks to a rebound in geopolitical risk premium in June...
Have a great week-end
Charles for the team