Wall Street continues record-beating run

Last Week in the City provides a round-up of market movements and the global investing outlook. This covers the week to 14 June 2024.

| 12 min read

The S&P 500 and Nasdaq registered record closing highs for a fourth session in a row on Thursday as technology shares extended their recent rally.

The number of Americans filing new claims for unemployment benefits increased and another report showed producer prices unexpectedly fell in May. This has helped hopes of an interest rate cut, but members of the rate-setting Federal Open Markets Committee indicated just one interest rate cut was in prospect this year.

Over the week, the blue-chip FTSE 100 index was down 1.1% by mid-session on Friday, with the more UK-focused FTSE 250 trading 1.9% lower.

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The Conservative and Labour parties both released their manifestos ahead of the general election on 4 July. The latest polling is uncomfortable for the incumbent Tories under Rishi Sunak. Nigel Farage's Reform UK Party overtook the Conservatives in an opinion poll for the first time. The poll by YouGov for The Times newspaper put Reform UK on 19%, up from 17% previously, and the Conservative Party unchanged on 18%. The opposition Labour Party topped the poll with 37%.

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The world faces a “staggering” glut of oil by the end of the decade. Global oil markets are expected to face a “major” surplus by the end of this decade, with spare capacity hitting levels only seen during the initial stages of the pandemic as demand growth slows and supply surges, the International Energy Agency said. Oil-demand growth is forecast to slow down in the coming years, reaching 105.4 million barrels a day in 2030, as the rollout of clean-energy technologies accelerates. Meanwhile, oil-production capacity is set to ramp up to nearly 113.8 million barrels a day, driven by producers in the US and the Americas. The IEA said production will be 8 million barrels a day higher than demand by the end of the decade.


The US Federal Reserve (Fed) has indicated that it expects to cut its key interest rate just once this year via the “dot plots” released after its latest meeting. In March, the dot plots indicated that members of the Federal Open Markets Committee expected three rate cuts before the end of 2024. The new outlook emerged after the Fed voted to hold interest rates at their current 23-year high, despite inflation moving lower. Inflation slowed to 3.3% in the year to May, down from 3.4% in the 12 months to April. However, between April and May inflation was unchanged and it remains above the Fed's 2% target. Fed chair Jerome Powell said that only "modest" progress had been made on hitting the target and the central bank would need to see "good inflation readings" before interest rates can be cut. Officials also revised up their projections for inflation and now anticipate core prices to rise 2.8% year-on-year in the fourth quarter, up from 2.6% in their March projections. They see core inflation slowing to 2.3% next year and 2% after that.

Bond group Pimco expects more regional bank failures in the US because of a “very high” concentration of troubled commercial real estate loans on their books.

The UK economy failed to grow in April after wet weather kept shoppers at home and slowed down construction activity. Gross domestic product (GDP) was unchanged between March and April, matching analysts’ expectations, and was 0.7% higher in the three months to April compared with the previous three-month period, the Office for National Statistics (ONS) said. This followed the fastest growth in two years between January to March, which ended the recession that was seen the final half of 2023. The ONS figures show spending on services, which includes everything from hairdressers to hospitality, grew for the fourth month in a row. The sluggish economic performance has firmed-up hopes of an interest-rate cut this summer.

Bond group Pimco expects more regional bank failures in the US because of a “very high” concentration of troubled commercial real estate loans on their books. “The real wave of distress is just starting” for lenders to everything from malls to offices, according to John Murray, Pimco’s head of the global private commercial real estate team.


In a shock move, France’s president, Emmanuel Macron, called a snap parliamentary election that will be held within the next 30 days. After suffering a crushing defeat at the hands of Marine Le Pen’s far right National Rally (RN) in the European parliamentary elections, the French president on Sunday evening unexpectedly announced a snap general election. The president has presented it as an existential choice for French voters: do you really want to be governed by the far right?

The European Commission will impose provisional duties on imports of Chinese electric vehicles (EVs) of up to 38.1%, a move likely to ruffle feathers in Beijing. The Commission, which oversees European Union (EU) trade policy, said the tariffs would be 17.4% for BYD, 20% for Geely and 38.1% for SAIC. BYD shares jumped in Asian trade after the carmaker’s tariff was lower than expected. Other companies cooperating with the investigation would face a tariff of 21% and non-cooperating companies 38.1%. The tariffs are likely to be in place by July.

The Biden administration is considering further restrictions on China’s access to semiconductor technology used for artificial intelligence (AI). The measures being discussed would limit China’s ability to use a cutting-edge chip architecture known as gate all-around (GAA), Bloomberg reported. GAA is a type of transistor architecture that helps improve chip performance and reduces power consumption. The US goal is to make it harder for China to assemble the sophisticated computing systems needed to build and operate AI models, the report said. Companies such as Nvidia, Intel and AMD, along with manufacturing partners TSMC and Samsung, are looking to start mass-producing GAA semiconductors by 2025.

In recent years, both the US and the European Union have experienced substantial levels of legal migration, illegal entry and asylum applications. This has political consequences.


Crest Nicholson issued a profit warning. The house builder said its annual profit will fall by about a third this year, as housing market challenges persist longer than expected. Management said house sales had fallen since Easter and that, while the spring selling season “started well”, volatility in mortgage rates and a later rate cut than expected has caused it to lose momentum. As a result, interim profits slumped 88%. The company slashed its dividend, proposing an interim payment of just 1.0p per share, down 82% from the 5.5p paid out a year ago.

DFS Furniture issued a profit warning, for which it blamed shipping disruption in the Red Sea and weak demand from customers. The disruption to shipping has delayed between £12m to £14m worth of deliveries, management said. Cargo ships are having to take lengthy and expensive detours to avoid the Suez Canal trade route amid attacks by Houthi rebels in the Red Sea.

Tesco said it has recorded a "strong" rise in retail sales in the latest quarter – helped by easing inflation. The UK's largest supermarket also said its market share was growing at its fastest rate than at any time in the last two years. Sales in the UK and Ireland rose 3.4% to £15.3bn year-on-year in the 13 weeks to 25 May.

Shares in Rentokil Initial moved sharply higher following reports that activist investor Nelson Peltz’s Trian Management has taken a significant stake in the pest-control company. According to Bloomberg, the investment group is now among the top 10 shareholders in Rentokil and has “reached out to discuss ideas and initiatives to improve shareholder value”.

Mexican billionaire Carlos Slim has taken a 3.2% stake in BT Group. According to a regulatory filing late on Wednesday, the stake – worth around £400m – was taken by Mr Slim’s family business Inbursa.

Insurance and investment group Legal & General announced a £200m share buyback as it set out plans to restructure the business into three core units and promised to increase shareholder returns. Management said it intended to return more to shareholders over 2024 to 2027, with 5% dividend growth in 2024 followed by 2% growth per annum, as well as further share repurchases.

Halma reported another year of record profit and revenue that were ahead of market expectations. The engineering group said strong growth in the safety and the environmental and analysis sectors more than offset a decline in the healthcare sector. Guidance was modestly better than City expectations and the group posted record revenue ahead of £2bn for the first time. This was the group’s 21st consecutive year of record adjusted profit, and the 45th year in a row that the dividend has been raised by at least 5%.

Apple will boost its Siri voice assistant and operating systems with OpenAI's ChatGPT as it seeks to catch up in the AI race. The technology giant announced the Siri makeover along with several other new features at its annual developers show on Monday. It is part of a new personalised AI system – called "Apple Intelligence" – that aims to offer users a way to navigate Apple devices more easily. Apple shares hit another record high following the presentation.

Broadcom beat market expectations in its second-quarter results, sending its shares higher. The chipmaker expects about $51bn in sales during its fiscal 2024 year, an increase over the company’s previous forecast, and slightly higher than consensus expectations of $50.42bn. Broadcom is one of the chipmakers continuing to benefit from the artificial intelligence boom.

Johnson & Johnson agreed to pay $700m to settle an investigation by 42 US states and Washington, DC into its marketing of baby powder and other talc-based products, which are blamed for allegedly causing cancer. The settlement by the US-listed group resolves charges that Johnson & Johnson misled consumers into believing its talc products were safe. The healthcare group did not admit wrongdoing and has said its talc products are safe and do not cause cancer. The company announced a settlement in principle in January.

Tesla shareholders have backed a record-breaking pay package for chief executive Elon Musk and approved a plan to move the company’s legal headquarters to Texas. The deal was blocked earlier this year by a judge in Delaware over concerns it was unfair to shareholders. The payout is worth up to $56bn, with the exact amount dependent on the Tesla share price.

Boeing delivered 24 commercial jets in May, including 19 of its 737 family of aircraft, as parts shortages and fresh scrutiny by China complicated efforts to recover from a crisis engulfing its most popular aircraft. In January one its 737 Max 9 aircraft operated by Alaska Air suffered a mid-air blowout. This was the same as its total for April, the lowest monthly tally in more than two years. Its European rival Airbus delivered 53 aircraft in May.

Belgian metal recycling group Umicore issued a profit warning, citing steep cuts to demand projections for battery materials. The company, which makes catalytic converters and battery materials for carmakers, is the latest supplier to be hit by the slowing EV market. Umicore was expecting more orders from Chinese EV makers looking to set foot on the continent, but it said that these volumes will not materialise in 2024.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Wall Street continues record-beating run

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