A Year of Economies and Financial Markets – June 2024

Over the past 12 months, the major global stock markets have demonstrated a positive and robust trend, driven by a variety of factors:

• In the US the S&P 500 is up 15.69% compared to this time last year
• The UK posts positively with the FTSE 100 up 9.53%
• Across Europe it is a similar story, the STOCC Europe 600 is up 12.76% over the year

One of the key drivers causing the positivity across Europe is energy and industrial sectors performing well and benefiting from the higher commodity prices. The UK tells a similar story with mining as well as energy helping push the indices.

The US owes its favourable market position to the “magnificent seven,” which has pushed the US highs through the love of tech stocks. Questions arose over whether these stocks can keep growing, and while there is the occasional wobble, they have so far stayed the course and Nvidia are now the most valuable company in the world.

Economic Improvements

China

China is navigating its way through a complex landscape of recovery and structural challenges but has posted a Q1 2024 GDP growth rate of 5.3% year on year. China’s challenges will persist long term with issues caused by an ageing population.

Japan

Japan has potentially less of a complex situation to control than China, but after years of downturn its economy and equity markets are performing well.

Bond Markets

Bond markets across the world have largely begun stabilising with inflation being curbed and central banks easing off persistent rate rises.

Political Climate

Major elections are happening in France and the USA (along with the recent UK General Election). Long-term markets are usually unaffected by such events, and most portfolio managers would not gamble on results or take a stand given the long-term evidence.