Agencies
LONDON/NEW YORK
The unstoppable march of the mega caps, sloth-like central bank pivots, political palpitations aplenty and M&A is back - the first half of 2024 has been another whirlwind in world markets.
Forecasts for a global interest-rate-cutting frenzy may not have materialized, but Nvidia and the rest of the Magnificent 7 soared another $3.6 trillion in market value.
MSCI’s 47-country world stocks index has clocked up a punchy 11 percent since January. Good yes, but nowhere near the 30 percent leap of team tech, or the frankly eye-popping 150 percent gain of chip champ Nvidia.
“Thirty percent of the S&P’s returns this year have come from Nvidia alone,” the chief investment officer of IBOSS Asset Management Chris Metcalfe said, pointing out it was now the most expensive stock on the most expensive market in the world.
Japan’s yen has bowed to a 38-year low against the dollar in currency markets. Cocoa had one of its best-ever runs while French bond risk has exploded to its highest level since the euro crisis after French President Emmanuel Macron’s drubbing by the far right in EU elections this month drove him to call a snap parliamentary election on Sunday.
Government bonds had been having a tough time anyway. Predictions of a gush of rate cuts have turned out to be just a dribble in a few parts of Europe and emerging markets and certainly not in the United States yet. As a result, anyone owning a basket of benchmark bonds has lost around 1.5 percent of their money.
“At the end of last year, the markets expected seven (US) rate cuts and now they are expecting just one or two,” Nadege Dufosse, the head of multi-asset at Candriam said. “That has been the big driver and explains the (poor) performance.”
The big story in commodities has been cocoa sky-rocketing almost 85 percent due to shortages which is already its second-biggest annual leap of all time, although certainly is not good news for chocoholics.
Gold hit a record high of just shy of $2,450 an ounce last month. Oil is up a respectable 12 percent while bitcoin broke though $70,000 and set a flurry of new highs after US watchdogs gave bitcoin exchange-traded funds the green light.
The value of global M&A activity is up 5 percent compared to last year.
That’s mainly down to a brace of $35-billion deals that saw credit-card firm Capital One take over Discover Financial and chip designer Synopsys buy out rival Ansys, although it could have been much more though if BHP’s gripping $49-billion pursuit of Anglo American had succeeded.
Off the beaten track, Ecuador’s bonds have made 46 percent despite lingering debt concerns and Argentina’s new chainsaw-wielding President Javier Milei has helped its bonds jump 32 percent.
Emerging-market veteran Kevin Daly at Aberdeen said there has been a “distressed to impress” move, with the bonds of crashed countries like Zambia, Ghana and Sri Lanka all rallying between 16 percent -23 percent as their years-long debt restructurings have neared an end.
As always though, there has still been plenty of downs in emerging markets.
Chinese property stocks have fallen for the ninth quarter in a row. Devaluations have shoved Nigeria’s and Egypt’s currencies down 42 percent and 36 percent respectively, while Mexico’s peso is down nearly 8 percent this month after a resounding presidential election result fed worries about its future path.
