European investors and Saxo clients alike were focused on France this week. Increased activity in the CAC40 could continue as the political backdrop unfolds. Meanwhile, the CPI numbers and FOMC meeting kept investors busy in the states. US tech is always an investor favorite with Apple reaching news highs, and we saw more clients add to Nvidia positions as the 10-for-1 stock split took effect.
Political upheaval pushes CAC40 down 6% on the week
This week we have seen increased client activity in France’s main index as it slumps more than 6% on the week. Investors turned risk-off as the political landscape looked fragmented following the call for a snap election. Clients are using ETFs and Contract futures to achieve their desired exposure.
Soft CPI, but hawkish shift in dot-plot
S&P500 and Nasdaq 100 squeezed out new highs again this week and the macro action kept US indices among the top traded ETFs across the Saxo client base. It was double-whammy Wednesday with both US CPI and FOMC policy meeting. CPI was softer than expected while the median dot-plot reduced the number of 2024 cuts to just one. Investors liked the reduced inflation and seemed to agree with the dot plot projections, lifting sentiment on US equities.
Inflation: one is a change, two is a trend
Apple Inc boasts AI strategy
Apple Inc (AAPL:xnas) is a name held widely across the Saxo client base so many would have been pleased to see the share price rally as much as 12% this week. The move reshuffled the coveted “most valuable company” title, with Apple topping the chart as of close Thursday. The company unveiled a new AI platform called “Apple Intelligence” with features that will be added to the iOS operating system.
Apple reclaims "most valuable company" title
The coming week is jam-packed with economic data starting with US Retail Sales, ZEW Survey and EU CPI on Tuesday, UK CPI on Wednesday, BoE policy meeting on Thursday, and US and EU PMI on Friday. Key earnings are Lennar (LEN:xnys) on Monday which will build a picture of the US housing sector. And note Friday the 21st of June sees the FTSE quarterly index rebalance – increased volumes are expected on the close.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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