June Review 2024
Europe
The European Central Bank cut interest rates by 25 basis points in June, the first of the Western central banks to begin loosening monetary policy since rate hikes began almost five years ago. ECB President Christine Lagarde signalled that a further rate-cut at the next meeting in July seemed unlikely given the recent rises in inflation and wage growth.
European Parliamentary Elections took place on the 8th of June. Marine Le Pen’s far-right party the Rassemblement National won an overall majority ousting Macron’s incumbent’s, leading the French President to call for a snap election to take place on the 30th of June and 7th of July.
US
US Labour market figures for June came in marginally hotter than expected at 4% vs 3.9% forecast. This was of little concern to the Federal Reserve which opted to keep rates unchanged at 5.50%. The annual US inflation reading printed at 3.3%, logging a decrease of 0.1% from a month prior. Forward guidance was no surprise as the FOMC reiterated future rate cuts would be data dependent.
UK
U.K. inflation finally reached its 2% target, down from the 2.3% reading in May. Despite the economy making strong ground in recent months, with GDP reporting 0.6% growth and the FTSE100 reaching all-time highs, the Bank of England opted to hold rates steady at 5.25%, stating that a future rate-cut could be expected in August. This all made little difference to Prime Minister Sunak’s election campaign, with Labour leading in the polls by 22 points ahead of judgement day on the 4th of July.
Equity Markets
In the capital markets, NVIDIA’s market value rose past $3tn, at least temporarily overtaking both Apple and Microsoft for the prestigious title of the world’s most valuable company.
Apple finally announced their AI strategy, partnering with OpenAI to integrate ChatGPT into their new devices as part of an “Apple Intelligence” system. Their share price rose by over 10% beyond the $215 mark following their much-anticipated Worldwide Developers Conference in California.
The board of Hargreaves Lansdown recommended a takeover offer led by private equity fund CVC Capital Partners, valuing the UK’s investment platform at £5.4bn. Their share price rose by over 9% to £11.53 following the bid.
Online fast-fashion group Shein came a step closer to listing on the London Stock Exchange, after filing its pre-listing documentation with the Financial Conduct Authority. This filing is a pre-cursor to its IPO prospectus which the UK regulator would need to approve before a listing can take place.
Commodities
In the commodities sector, Trafigura’s profits fell by more than 70% despite reporting its fourth best performance on record. Net profits in the 6 months to March were $1.5bn, down from $5.5bn the previous year.
Saudia Arabia agreed to sell roughly $12bn worth of shares in the state-owned oil company Saudi Aramco, as the Kingdom sought further capital for its sovereign wealth fund.
Oil supermajor ConocoPhillips agreed to buy Marathon Oil in an all-stock deal which valued the Houston-based company at $22.5bn including debt, as a wave of mergers and acquisitions which started last autumn continues across the Texan Permian Basin.
WTI crude oil prices rose by $5 per barrel from $76 to $81 across the month of June, reflecting the impact of extended voluntary supply cuts by the OPEC cartel.
Gold prices rose throughout the month of June albeit at a more moderate pace, peaking at $2367 per ounce having previously reached an all-time high of $2450 per ounce in May.
The trend of de-dollarisation has continued across emerging market economies as central banks sought to diversify their holdings into alternative currencies and assets after the United States weaponised the dollar following Russia’s invasion of Ukraine and the Israel-Hamas conflict.
The dollar’s shares of global foreign exchange reserves excluding gold has fallen by just shy of 15% over the past two decades according to research published by the IMF.
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