Weekly Review

Global equity markets remained remarkably resilient last week despite another sharp rise in interest rates, elevated energy prices, and the first rate hike from the Federal Reserve in more than three years. U.S. equities initially came under pressure following Wednesdays widely anticipated 25 basis point increase in the Fed Funds target rate to 3.75%-4%, but the selloff was relatively short-lived, with most major indices recovering from their knee-jerk response to the rate announcement.

Global equity markets were under pressure last week with rising energy prices, escalating U.S.-Iran hostilities, and another leg higher in Treasury yields. U.S. equities gave back much of the gains from the prior week, with the S&P 500, Nasdaq 100, and Russell 2000 all slipping a little Tuesday through Thursday before regaining some ground on Friday. The selloff was relatively orderly, with the market continuing to focus on whether the increase in energy prices represents a temporary
geopolitical shock or the beginning of a more persistent inflation problem.

Global equity markets were quietly choppy this week as investors grappled with a rise in global bond yields, a renewed escalation in U.S.-Iranian hostilities and a shifting outlook for Fed policy.U.S. equities came under pressure early in the week as the global bond selloff and higher energy prices challenged elevated valuations, although stocks recovered as the week progressed, with theS&P 500, Nasdaq 100, and Russell 2000 posting modest gains of under a half a percent.

Global markets were relatively quiet this past week with most major macro asset classes modestly reversing some of the prior week’s sharper moves in a quiet consolidation. The S&P 500 and Nasdaq 100 each rose about a half of a percent, while the small-cap Russell 2000 fell 1.5%.

Equity markets continued their march higher last week, as the S&P500 and Russell 2000 hit new all-time highs for the second consecutive week. The NASDAQ came within 2% of its early June all-time high, though it continues lagging its counterparts.

The dominant theme in global equity markets this past week was the intersection of earnings season, monetary policy and the ongoing repricing of the semiconductor sector. With more than one-third of the S&P 500 reporting quarterly results, for the most part corporate America continued delivering resilient earnings growth despite a backdrop of higher interest rates and persistent inflation.

The dominant theme in U.S. equity markets last week was the sharp repricing of hyperscalers, prompted by investors showing little tolerance for rising capital expenditures tied to AI infrastructure.

A sharp selloff in global memory chip stocks accelerated through the week, sparking concerns over the sustainability of the artificial intelligence investment cycle, while renewed hostilities in the Middle East and shifting Federal Reserve expectations drove broad sector rotation across global equity markets.

Concerns over the durability of the artificial intelligence rally and renewed geopolitical tensions in the Middle East dominated global equity markets this week. Selloffs in memory chip companies early in the week were tied to Samsung’s preliminary earnings report, in spite of the fact that the company forecasted a nearly 20-fold year-over-year increase in profits.

A lackluster showing for the labor market took center stage last week—June’s 57k new jobs number was nearly 50% below expectations, while the previous two months’ figures were revised down by a combined 74k.

Last week’s overarching story in equity markets was the artificial intelligence trade—after an extraordinary run, investors decided it had become overextended. Heavy declines in Samsung Electronics and SK Hynix fueled an over 10% decline in South Korea’s KOSPI index on Tuesday, a market that is still up 125% YTD.

As the week began, investors extended the previous week’s relief rally, fueled by news of a deal to end the U.S. Iranian conflict and the potential that the Strait of Hormuz may reopen soon. Lower energy prices supported the Industrials and Materials sectors, and Technology benefited from the overall improvement in risk sentiment.