SUMMER: Our outlook for harder won but still positive returns remain in place as we enter the peak summer. This typically see’s lower stock market returns and volumes, with June historically the 2nd weakest month of the year (and worst in France and Italy). Concerns focus on further US Fed hikes and post debt-ceiling bond issuance indigestion. But markets are being supported by well-founded tech optimism, a broad upturn in earnings forecasts, and negative investor sentiment. We focus on long duration big tech and traditional defensives and are cautious small cap and commodity cyclicals. Economic growth will slow, lowering inflation and interest rates.
MAY: Tech exceptionalism drove US stock markets higher, but with low volumes, narrow AI-led leadership, and more volatility. Semis giant NVIDIA joined $1 trillion market cap. club. Overseas outperformance reversed as investors gave up on China’s reopening recovery and UK’s inflation fight. Safer-havens, like gold and the dollar, performed well as US banks and debt ceiling fears remained. Whilst stubborn inflation made a hoped for May Fed 5% rate peak seem premature. Oil’s losses extended commodities run as the worst asset class this year amidst still-high growth fears. A 3% US dollar index rebound drove new currency lows from South Africa to Turkey.
JUNE: Central Banks, tech, and seasonality are the coming highlights. An 11th Fed rate hike is back on table for the June 14th meeting, making non-farm payrolls (2nd) and May inflation (13th) reports more important than ever. Whilst the ECB (15th) and BoE (22nd) are also set to hike rates further, and investors are closely watching the BoJ (16th) for tightening baby-steps from -0.1%. Tech stocks will be in focus with world’s largest stock Apple’s developers conference (5th), NVIDIA’s annual general meeting (22nd), and MSCI’s overdue Korea’s upgrade decision to developed markets (22nd). Whilst US triple-witching (16th) will be a top volume day of the year.
All data, figures & charts are valid as of 31/05/2023