Whilst we rarely comment on individual stocks, the meteoric rise of Nvidia has been hard to ignore. However, it is worth noting that Nvidia’s stint as the most valuable company didn’t last long with falls at one-point last week touching 13%, wiping billions of dollars from its value.
Tech troubles didn’t stop here with Microsoft in the eye of the European Commission for a breach of antitrust rules in relation to tying Teams into its Office software. Apple was also in the bad books for rules forced on app developers.
Amazon didn’t escape either: a £2.7 billion action for anti-competitive conduct was launched over claims that the group discriminates against third party sellers.
Having said this, the technology sector overall continued to perform well, as did growth stocks more generally. There was some good news for Banks with a release from the Federal Reserve confirming that all of the assessed met their minimum capital ratios. That being said the S&P returned a meagre 0.24%.
Closer to home GDP was better than expected at 0.7% for the first quarter. Of course, the main noise remained around elections with debates dominating the evening television throughout the week. Against this backdrop the FTSE 100 declined by 0.8% which was marginally better than the smaller end of the market with the FTSE 250 falling by 0.9%.
US GDP numbers were also better than expected with the first quarter coming in at 1.4% versus expected 1.3%. Jobless claims were also slightly better at 233k, whilst inflation came in at 2.6% which remains above the desired 2% level. However, month on month inflation appears to be slowing and markets continue to expect the first rate cut in September.
Japanese markets were particularly strong with a gain of 2.6% as the Yen remained weak. Expectations that authorities would once again step in to stem the declines were not met. However, the yield on government bonds fell to 1.06% (from 0.97%) as anticipation of further monetary policy tightening grew with inflation touching 2.1% in June (from 1.9% in May).
In Europe we saw Marine Le Pen’s far right party take significant gains from President Macron’s centrist alliance in the first round of elections. Economic data was a little more mixed with sentiment indicators ticking lower but consumer confidence increasing.
Inflation numbers released for Spain and France were also positive with headline numbers falling to 3.5% and 2.5% respectively. Markets were broadly weaker with the STOXX 600 coming in 0.72% lower. Bonds were also weaker as expectations of further rate cuts became more muted.
Chinese markets were weak despite industrial companies showing increased profits. Global funds selling their holdings will have impacted the market with an expectation that June will see the first monthly outflow since January.
To end as we began: Chapel Down, the UK’s largest winemaker is considering a sale to fund long term growth. A warmer climate has helped the company produce 22 million bottles of wine, not quite up to French standards who tip the scales at 8 billion bottles a year!
Paul Surguy – Managing Director, Head of Investment Management