Weekly Market Update 21/06/2024

Nvidia continued its dramatic journey this week, surpassing Microsoft to become the world’s most valuable listed company in trading on Tuesday, valued at $3.335tn, equating to about $135 per share. Two years ago, the company was valued at around $300bn, and eight years ago was worth less than 1% of its current value.

Turning to the UK, for the first time in nearly three years, consumer price inflation hit the Bank of England target of 2% in May according to data from the Office for National Statistics, down from 2.3% in April. This now puts headline inflation below that of both the US and the Eurozone, although a note of caution is that services and core inflation both remain somewhat elevated, standing at 5.7% and 3.5% respectively.

In a “finely balanced” decision, the Bank of England (BoE) has again kept interest rates on hold at 5.25%, despite the inflation data, explaining that they need to be sure inflation will stay low. However, the BoE signaled a rate reduction may come as soon as the next meeting in August as long as inflation forecasts indicate a sustained reduction in inflation and price pressures. Markets are now pricing in a more than 40% chance of a 0.25% rate cut in August, up from roughly a third before the announcement. Both the European Central Bank and the Bank of Canada have already begun lowering rates, with the US Federal Reserve keeping rates on hold so far this year.

Andrea Wood, Chartered MCSI
Investment Manager