Intense interest in technology companies drove up share prices in the sector over the first six months of 2023. The US Nasdaq Index climbed by 31.7% during the first half of the year and rose by 6.6% over June itself.
- The Federal Reserve left rates unchanged in June
- The eurozone slipped into recession
- The Nikkei 225 Index breached 33,000 points
Tech spike: intense interest in technology companies drove up share prices in the sector over the first six months of 2023. The US Nasdaq Index climbed by 31.7% during the first half of the year and rose by 6.6% over June itself. The market value of NVIDIA hit US$1 trillion during June, while Apple traded above US$3 trillion . The Dow Jones Industrial Average Index rose by 4.6% in June.
“Are we done? Have we finished the journey? No” (ECB President Christine Lagarde) “The rate of unemployment increased sharply”
Fed pauses: the US Federal Reserve (Fed) left its key federal funds rate unchanged in June at a range of 5% to 5.25% following a series of ten consecutive increases. Nevertheless, the Fed made it clear that further tightening is on the cards: although the annualised rate of US consumer price inflation continued to ease during May, falling from 4.9% in April to 4%, inflation remains well above the Fed’s 2% target. Fed Chair Jerome Powell warned: “The process of getting inflation back down to 2% has a long way to go” .
Not done yet: the European Central Bank (ECB) raised its key interest rate from 3.25% to 3.50% during June. ECB President Christine Lagarde commented: “Are we done? Have we finished the journey? No”, raising expectations of another rate increase in July. Nevertheless, the Dax Index rose by 3.1% and the CAC 40 Index climbed by 4.2% over the month , boosted by hopes that the ECB’s current tightening cycle might be nearing its end.
Eurozone enters recession: although the rate of headline inflation in the euro area eased from 6.1% in May to 5.5% in June, core inflation – which excludes volatile items such as food, alcohol, tobacco and energy – rose from 5.3% to 5.4%. Following a contraction of 0.1% in the final quarter of 2022, revised figures showed that the eurozone’s economy shrank by 0.1% during the first three months of 2023, pushing the euro area into recession.
Renaissance for Japan?: The Nikkei 225 Index breached 33,000 points for the first time in 33 years, increasing by 7.5% during June, and by 27.2% over the first six months of the year. Its rise reflects renewed investor interest in Japanese stocks, underpinned by attractive valuations and the news that veteran US investor Warren Buffett had increased his exposure to Japan. Japan’s first-quarter economic growth proved stronger than initially estimated, improving from an earlier calculation of 0.4% to 0.7%.
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