U.S. Markets Get a Value & Small‑Cap Boost
- Investors shoved cash into value stocks and the lower‑market cap crowd last week.
- The venerable Dow Jones did the most dancing of the week, beating everyone else—yeah, even the S&P.
- Value stocks finished ahead of growth by a whopping 4.77%, the biggest gap seen since March 2023.
Chip Shock Even Though Global System Outage Rolled Out
The whole world’s computer rig might have hiccupped, but the U.S. stock floor stayed smooth.
- Big chip names like Taiwan Semiconductor Manufacturing Co., Broadcom, and NVIDIA took a hit.
- Why? The Biden team is toying with hard‑limits on Seoul‑based firms (e.g. Tokyo Electron, ASML Holding). The scare rippled through the whole sector.
Politics & The Market – A Sweet Combo
- Recent polls hint at a GOP sweep in upcoming elections.
- Value stocks benefit from the promise of lighter banking rules and higher tariffs – if Republicans win.
Economy‑Side Numbers That Hit the Mark
- Retail sales (minus gas and cars) jumped 0.8% in June – the best since January 2023.
- Building permits spiked 3.4%, cutting a three‑month slump.
- The Fed’s industrial production saw a 0.6% rise, while Philadelphia’s business gauge hit a three‑year high.
- But the labor market spun a mixed thread: weekly jobless claims climbed to 243k, and continuing claims hit 1.867m—most since Nov 2021.
Fed Chair Powell Says “Balance is Improving”
- He noted the inflation‑labour market equilibrium is tightening.
- 10‑year Treasury yields rattled: dipped because easing inflation worries, then spiked again.
- Municipal bonds pumped out a large primary calendar; investment‑grade corporate bonds surpassed hopes.
- High‑yield bonds rose on stronger macro sentiment and the looming Fed cuts.
Europe’s Twists and Turns
- STOXX 600 slid 2.68% as U.S.–China trade tension built.
- DAX, CAC 40, FTSE MIB all dropped; FTSE 100 slipped 1.18%.
- ECB kept rates at 3.75%, hinting September decisions are still open.
- Lagarde warned outlook leans negative; inflation could wobble before easing later in 2025.
- Household loans jumped for the first time in two years.
- Euro‑area production fell 0.6% in May, especially in Germany, Italy, France.
UK: Inflation Holds Fast, Payroll Slowly Slows
- Annual CPI stayed at 2% thanks to falling energy.
- Core CPI stuck at 3.5%; services inflation at 5.7%.
- Average earnings (sans bonuses) were up 5.7% in the first three months to May, down a tad from April’s 6%.
Japan’s Market Slow‑Mo and Future Rate Speculation
- Nikkei 225 down 2.7%; TOPIX down 1.2%.
- Tech stocks got a squeeze due to U.S. export limits on China.
- Fans chatter about BoJ rate hikes.
- 10‑year JGB yield slid slightly; yen strengthened amid suspected government pokes.
Japan’s Consumer Prices and GDP Outlook
- Nationwide core CPI up 2.6% YoY in June—slightly shy of expectations.
- Overall inflation stuck at 2.8%.
- Govt dialed GDP growth forecast down to 0.9% for FY ending March 2025 from 1.3%.
China: A Mixed Bag While Export-Driven Economy Struggles
- Shanghai Composite +0.37%; CSI 300 +1.92%.
- Hang Seng in Hong Kong down 4.79%.
- Q2 GDP 4.7%—below target and lower than Q1’s 5.3%.
- Retail sales grew 2% in June; industrial production 5.3% (down from May’s 5.6%).
- Fixed asset investment +3.9% in the first half; property investment dipped 10.1%.
- Urban unemployment steady at 5%; youth jobless rate slashed to 13.2%.
Housing: Price Slumps Keep Running
- New home prices fell 0.7% in June—12th straight month of losses.
- Despite a big property rescue package, the sector remains a drag on growth.
Bottom line: U.S. favor value and small‑cap, while Europe and Asia wrestle with trade friction, shifting data, and regulatory tweaks. Positive economic surprises are still out there, but labor markets and world politics keep their eyes on the next move.
