Weekly Market Update 14/06/2024
The S&P500 and Nasdaq hit new all-time highs this week as investors focussed on the unexpectedly lower inflation figure of 3.3% in May, down from 3.4% in April. However, Federal Reserve officials have signalled they now only expect to cut rates once this year, holding rates at a 23-year high with concerns that inflation remains stubbornly above the Fed’s 2% target. This seems a world away from the stance taken in March when three cuts were expected this year.
Also in the US this week, Tesla shareholders have reapproved a $56bn pay package for chief executive Elon Musk and to reincorporate in Texas, after these were blocked by a Delaware court in 2018. Although the vote does not supersede the court’s original decision, it could persuade the judge to reverse her stance. The pay package, which included stock options, was the largest in US history and will boost Musk’s stake to 20% from his current 13%. Tesla shares are down 29% year to date, valuing the company at $571bn.
In the UK, the Office for National Statistics (ONS) announced that wage growth remained steady at 5.9% in the three months to April, as a rise in the minimum wage boosted pay despite a slowing jobs market. The ONS said, however, there are the signs the labour market is cooling, with unemployment on the rise and an uptick in claims for jobless benefits. These figures are seen to be broadly in-line with BoE projections and would not change the outlook for interest rates. It remains unclear when the central bank will begin cutting rates, with all eyes on next week’s Monetary Policy Committee meeting.
Andrea Wood, Chartered MCSI
Investment Manager
