Market snapshot: gloomy start to week as Wall Street shuts for the day
19th June 2023 08:28
by Richard Hunter from interactive investor
A winning streak in the US ended on Friday, and there's little to cheer markets Monday ahead of a series of events scheduled for the week ahead.

Investors paused for breath after an exhausting few days and ahead of a long weekend, with each of the main indices dipping slightly but finishing in positive territory for the week.
Wall Street is shut Monday for Juneteenth, a federal holiday that commemorates the end of slavery in the United States.
Renewed impetus had gripped investors following a better than expected inflation number and the Federal Reserve's decision to hold interest rates in June. The two factors are inexorably linked and thoughts will now turn to the next strategic move from the Fed with, as ever, any number of signals for investors to digest in anticipation of the next meeting of the central bank in July.
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Chair Powell had intimated that two more rate hikes would be forthcoming this year, dependent on the data, while comments from two more Fed members that “core inflation is not coming down like I thought it would” and that another was “comfortable” with more rises keeping the debate very much alive.
Even though consumer inflation expectations dropped on data released Friday, a separate report from the New York Fed’s in-house economic forecasting model estimated an increase in core inflation this year to 3.7% from its previous estimate of 3.5%. It also raised its projections for growth from 0.2% to 1% this year which, coupled with its estimate that the level of 2% inflation would not be achieved until the end of 2025, adds another level of complexity for the Fed to ponder ahead of the July meeting.
Elsewhere, despite Friday’s pause, tech stocks had another strong week as the AI fervour continued. Microsoft Corp (NASDAQ:MSFT) shares hit record highs on Thursday, while the current darling of the AI bulls, NVIDIA Corp (NASDAQ:NVDA), added 10% in the week and is now ahead by 192% this year.
As a result, the more tech focused indices continued their powerful march with the S&P500 and Nasdaq now ahead by 15% and 31% respectively in the year to date, with the more traditional Dow Jones having added a more pedestrian 3.5%.
Asian markets kicked off the week in subdued fashion, as investors erred on the side of caution after the previous breathless week. The Nikkei index came off the recent highs achieved on Friday, when the Bank of Japan’s decision to leave its accommodative monetary policy intact led to more buying interest. However, the current centre of investor concerns continues to be China, where hopes are still increasing for stimulative intervention by the authorities, although the lack of any announcements last week resulted in a wave of disappointment.
The People’s Bank of China is largely expected to cut prime loan interest rates tomorrow, which would add to a reduction last week in the medium-term loan rates. At the same time, growth projections are being cut across the region, as the initial optimism from an earlier year economic bounce following reopening have faded fast. The more recent economic data have pointed to blockages in the property market, while the consumer and youth unemployment are also giving cause for concern.
In the UK, the Bank of England is widely expected to raise interest rates again later in the week in the face of persistent inflation. The anticipated rise to 4.75% is not seen to be the end of the story, however, with some predicting a terminal rate of nearer 6%, which would put additional strain on an economy wrought with tepid growth and a tight labour market.
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This has underpinned a more recent rally for sterling, which has had the unintended consequence of undermining progress of the premier index. The FTSE100, with its estimated 70% exposure to overseas earnings, has seen the value of those revenues lessen progressively on repatriation, with the index now ahead by just 2% in the year to date.
In opening exchanges, the sombre mood seen in Asian markets rippled onto UK shores. The early declines were broad based and included those stocks with a Chinese bent, such as Burberry Group (LSE:BRBY) and Prudential (LSE:PRU), while the miners and housebuilders also succumbed to some selling pressure. There was something of a retreat towards defensive stocks such as the utilities, tobaccos and consumer staples, although the gains were half-hearted and not enough to offset the initial losses being suffered elsewhere.
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