Pre-Market Report – Monday 1 July: Financial Year Is Over

Wall St finished the week lower on Friday night as the presidential debate prompted new political uncertainty, outweighing easing inflation data. The S&P 500 fell 0.41% after touching a fresh intraday record high of 5.5k. The Dow Jones eased 45 points. The NASDAQ lost 0.71%, while the Russell 2000 found buyers, up 0.46%. For the quarter the NASDAQ gained 8.3%, the S&P 500 gained 3.9% while the Dow lost 1.7%. Tech outperforming once again.

High ranking Democrats over the weekend dismissed calls that Biden should be replaced by a younger candidate following his shaky debate on Friday. Polls indicated Democrat voters who think he should not be running for president rose from 36% to 46%. In economics, the US PCE price index rose by a mere 0.08% in May, representing the smallest increase since late 2020. This deceleration increased chances for rate cuts later this year. Consumer spending rose by 0.3% in May after falling in April, supported by solid income growth. These developments suggest that inflation pressures might be easing without causing substantial harm to consumers. Despite the positive inflation results US bond yields gained 9.6bp (10Y) and 3.1bp (2Y), pressuring mega-cap stocks. Meta was the worst of the Magnificent Seven, down 3%. Nvidia near flat.

ASX to fall. SPI futures down 35 points.

In Europe, Marine Le Pen’s far-right National Rally (NR) Party won the first round of French elections yesterday. 34% of the vote vs Macron’s ~20%-23%. The outcome will now depend on whether centre-left and centre-right parties combine forces to oppose the NR. This historically has happened. If no party reaches 50% majority after the first round, voting will go to a second round later this week.

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