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Please see below article received from Brooks Macdonald this morning, which offers a global market update.

What has happened

Yesterday’s trading session saw a notable divergence with the Magnificent Seven underperforming the broader market. This underperformance was primarily driven by a significant drop in Tesla’s shares, which fell by 2.81%, making it the second-worst performer in the S&P 500 index for the year 2024, with a 24.3% YTD loss. In contrast, Nvidia managed to carve out a new record high, closing up by 0.16% and securing its status as the top-performing stock in the S&P 500 for this year, boasting a 45.9% YTD increase. Meanwhile, market optimism continued to flourish in Japan, with the Nikkei index climbing 2.57% this morning to reach a 34-year peak.

US CPI preview

Looking ahead to the US CPI report, the mood was bolstered by the New York Fed’s inflation expectation survey, which indicated a decline in 3-year inflation expectations to 2.35%, the lowest since 2013, from a previous level of 2.62%. The 1-year inflation outlook remained relatively stable at 3%. With the upcoming release of the US CPI data, Wall Street analysts are predicting a reduction in the core y-o-y CPI to 3.7% and a decrease in the headline CPI to 2.9%.

What does Brooks Macdonald think

We are closely monitoring the upcoming release of the US CPI data, scheduled for 1300 GMT today. This report is anticipated to be a critical indicator for the Federal Reserve’s monetary policy decisions, particularly any potential interest rate cuts for the remainder of the year. The Fed is looking for further evidence that inflation is headed to its 2% target before considering cutting rates; hence confirmation of a continuing downward trend could significantly influence market expectations and Fed commentary.

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