As we start a new week, let's take a look at the significant events in the global economy over the past week with our weekly financial update, presented by Bas Kooijman, the CEO and Asset Manager of DHF Capital SA.

In a shortened trading week due to the Juneteenth holiday, U.S. stocks achieved modest gains, driving the S&P 500 Index to new record highs. The week ended with signs of a broadening market trend, as value stocks outperformed growth shares, and major indices surpassed the technology-heavy Nasdaq Composite. This broadening was partly driven by a significant event on Friday known as triple witching, which saw the expiration of options totaling around $5.5 trillion related to indexes, individual stocks, and ETFs.

Early in the week, concerns emerged about consumer caution amid easing labor demand and shrinking savings. Retail sales in May increased only by 0.1%, following a 0.2% decline in April. Notable declines in sales at bars, restaurants, and grocery stores suggested a pullback in discretionary spending and possible price cuts in certain food categories. Conversely, manufacturing showed strength with the Federal Reserve reporting a 0.9% increase in industrial production for May, the fastest pace in nearly a year, and factory operations at their highest level since last November.

Data released later in the week indicated a stronger economy than retail sales figures suggested. The S&P Global composite index for business activity rose to 54.6 in June, its best level in over two years, indicating robust growth in the services sector, despite ongoing wage pressures. Bond markets experienced fluctuations, with longer-term Treasury yields initially falling due to weak retail sales but rising again following stronger business activity readings. Investment-grade corporate bond issuance was substantial, surpassing expectations, while high-yield bonds benefited from improved sentiment and equity gains.

European markets saw a positive week, with the STOXX Europe 600 Index climbing 0.79%. This rebound was driven by easing political uncertainties and a favorable outlook for monetary policy. Major stock indices such as Germany’s DAX and France’s CAC 40 showed notable gains of 0.90% and 1.67%, respectively. The UK's FTSE 100 rose by 1.12%, while Italy's FTSE MIB outperformed with a 1.97% increase. The Bank of England (BoE) held its interest rate at a 16-year high of 5.25%. Despite a finely balanced decision-making process, the BoE's stance reflects expectations of potential rate cuts later this year. The headline inflation rate in the UK fell to the BoE’s target of 2% in May, down from 2.3% in April. Core inflation also eased but remained a concern with services inflation at 5.7%, above expectations.

The Swiss National Bank reduced its policy rate to 1.25%, marking the second consecutive quarter-point cut amid decreasing inflation pressures. Meanwhile, Norway's central bank, Norges Bank, maintained its rate at 4.5%, indicating stability for the remainder of the year before potential gradual reductions.

June saw an unexpected slowdown in Eurozone business activity as services lost momentum and manufacturing contracted further. The HCOB Composite PMI fell to 50.8 from 52.2 in May. In Germany, a slight increase in business activity was overshadowed by manufacturing weakness, while France faced a second month of declining output due to reduced new orders.

Japanese stock markets recorded negative returns, with the Nikkei 225 falling 0.6% and the TOPIX Index down 0.8%. Investor sentiment was affected by uncertainties regarding the Bank of Japan's monetary policy. The 10-year Japanese government bond yield rose to 0.97%, driven by higher-than-expected inflation data for May, which showed a year-on-year increase of 2.5%.

The yen weakened against the USD, reaching around JPY 158.8, approaching 34-year lows. This depreciation was influenced by interest rate differentials between the U.S. and Japan. Despite interventions to stabilize the yen, the currency remained under pressure. Economic data revealed that Japan’s private sector business activity stalled in June, with the PMI dropping to 50.0. However, manufacturing conditions improved slightly, and exports surged 13.5% year-on-year, aided by a weaker yen and strong demand from the U.S. and China.

Chinese markets faced declines due to mixed economic signals. The Shanghai Composite fell 1.14%, and the CSI 300 decreased by 1.3%. Conversely, Hong Kong’s Hang Seng Index rose by 0.48%. Industrial production growth in May was weaker than expected at 5.6%, while fixed asset investment slowed. Retail sales outperformed with a 3.7% increase, and the urban unemployment rate remained steady at 5%. The People's Bank of China maintained its lending rate at 2.5%, while injecting RMB 182 billion into the banking system.

China's new home prices fell by 0.7% in May, marking the steepest monthly decline in nearly a decade. This downturn occurred despite a historic rescue package introduced in May to support the property sector, suggesting continued challenges for the housing market and broader economic implications.

In summary, U.S. and European stocks gained modestly amid broadening market trends and easing political concerns, while Asian markets had mixed results due to economic data fluctuations and policy uncertainties.