Basic resources struggled as Chinese stimulus hopes, which had helped buoy European cyclicals through the first half of June, were dampened. Personal and household goods outperformed last week, albeit closing down 0.7%. Central bank action, combined with a worsening macro picture, were the key drivers.Īll sectors closed lower in Europe, with cyclicals lagging defensives. The Stoxx Europe 600 Index closed last week down 2.9%, notching its largest weekly decline since mid-March. The Bank of America Bull & Bear Indicator declined to 3.4 from 3.6 last week, the lowest level since 9 May amidst equity outflows, slowing bond inflows and worsening equity breadth. Last week, technology stocks saw their largest outflows in 10 weeks, totalling US$2.0 billion, while Chinese stocks saw their largest outflows since February this year, shedding US$1.6 billion. 2 UK stocks saw their 24th consecutive week of outflows.
US equity funds saw their first outflows in four weeks last week, losing US$5.7 billion, while European equity funds saw their 15th consecutive week of outflows, shedding US$2.6 billion. Headlines noting delays to China’s stimulus rollout also weighed on market sentiment last week.Īccording to Bank of America’s “Flow Show” Report, last week’s fund flows were bearish. Meanwhile, Federal Reserve (Fed) Chair Jerome Powell doubled down on hawkish rhetoric, noting there was a strong majority within the Federal Open Market Committee (FOMC) for further rate hikes. In addition, the Swiss National Bank hiked rates by 25 bps (as expected), whilst Norges Bank raised by 50 bps (more than expected). The UK Consumer Price Index (CPI) reading for May came in stronger than expected, which raised the question on the possibility of another large hike. 1 The Bank of England (BoE) raised its benchmark interest rate by 50 basis points (bps) on Thursday, a larger hike than anticipated. The S&P 500 Index closed the week down 1.4%, the Stoxx Europe 600 Index was down 2.9%, and the MSCI Asia Pacific Index closed down 3.9%. The MSCI World Index closed the week down 2.0% as hawkish central banks and disappointing macroeconomic reports put pressure on risk assets and recession fears resurfaced again. Last week, global equities retreated from recent highs.
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