world markets

Stocks roar back as economic data disappoint

From 20-24/06/2022

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World stock had a strong week, with the S&P notching its first weekly gain in four despite the geopolitical, energy and monetary environments remaining still very problematic. Bad news for the economy were interpreted as good news for stocks and inflation concerns are gradually being replaced by recession fears.


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AMERICAS

Stocks regained their footing during a bullish holiday-shortened trading week. Markets were closed on Monday in their first observance of Juneteenth. All major indices rallied more than 5%, ending a three-week losing streak. The Nasdaq soared by 7.5%, while the S&P 500 and the Dow spiked by 6.4% and 5.4%, respectively. Investor hopes were raised by economic data. New home sales surged 10.7% to an annual rate of 696,000 in May after plunging 12.0% to an upwardly revised rate of 629,000 in April. Meanwhile, a separate report from the University of Michigan regarding consumer sentiment, showed a slight improvement in inflation expectations. Both releases were seen as potentially reducing the urgency for steeper interest rate hikes by the Federal Reserve. It seems Wall Street is starting to believe that even if the economy has a recession, it will be a short one.

ASIA/PACIFIC

Japanese stock markets were higher this week as sentiment was supported by continued expectations that the Bank of Japan (BoJ) would keep its monetary policy ultra-loose. The annual inflation rate in Japan was at 2.5% in May, unchanged from April’s 7-1/2-year high figure and in line with market consensus. However, Japan’s inflation rate remains far below the rates of most of the world’s developed economies, but annual figure recorded in a report released on Friday exceeded the Bank of Japan’s 2.0% target for the second month in a row. Chinese stocks also advanced on stimulus hopes after President Xi Jinping reiterated his economic and social targets for the year. The Australian market rose 1.6% over the last five sessions. Mining stocks were the biggest losers this week as recession fears weighed on commodity prices. The materials sector decreased by 4.9%. Energy stocks were similarly impacted by falling oil prices.

EUROPE

European stock markets generated positive returns despite data pointing to deepening economic slowdown in the continent. The European Commission said on Wednesday that its gauge of consumer confidence in the eurozone tumbled to -23.6 in June from a revised figure of -21.2 in May. Economists had predicted the measure to fall to -20.5.

And S&P Global’s Flash Eurozone Composite PMI, which gauges services and manufacturing activity,  fell to 54.9 in May from 55.8 in April, below market forecasts of 55.3. Meanwhile, the annual inflation rate in the UK increased to 9.1% in May of 2021 from 9% in the previous month, the highest since 1982, as food costs rose at the fastest rate in 13 years.

MIDDLE EAST/ AFRICA

Trading in the Tel Aviv Stock Exchange (TASE) in the third week in June was marked by price increases in all the leading share indices. The TA-35 index increased this week by 2.5%, bringing year-to-date cumulative losses to 8.Trading took place against the backdrop of concerns of inflation and recession and the Government’s declaration this week of its dissolution, about a year after its establishment, and on elections in October 2022 – for the fifth time in three and a half years.

In Nigeria, equities reversed their bullish stance to close bearish during the week. The All-Share Index lost 0.14%, with the market capitalization following suit to close at N27.88 trillion. This brings the month-to-date performance of the Nigerian stock market to –2.42% and a year-to-date gain of 21.04%.


Content Disclaimer:
This page has been prepared for informational purposes only. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.


For any comments, suggestions or corrections email: kbalkoudi@worldmarketsdaily.com

Kyriaki Balkoudi is a markets editor for World Markets Daily. She holds a bachelor’s degree in Balkans Studies from Aristotle University of Thessaloniki, Greece and a master’s degree in International Politics from City University London, UK.


References:
“Global Markets Weekly Update”. T. Rowe Price. June 17, 2022
“Weekly market wrap”. Edward Jones. June 17, 2022
“Weekly Market Recap”. John Hancock Investments. June 17, 2022
“Schwab Market Update”. Charles Schwab. June 17, 2022
“Market Analysis”. Edmond de Rothschild. June 17, 2022


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