International markets hit multi-week low
International stock markets, including the UK, France, Japan, China, and New Zealand, have hit multi-week lows due to economic turbulence, inflation spikes, and rising interest rates. While US markets are performing well in May—with Nasdaq 100 up 8%, S&P 500 up 5%, and Dow 30 up 1.5%—the global picture is less favorable. Despite the adage "Sell in May and go away," which suggests market volatility and lower trading volumes, markets can still perform well if economic fundamentals and policies are supportive. Currently, the international market scenario is murky, reflecting significant economic pressures and cautious investor sentiment.
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May 31, 2024
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United Kingdom
The FTSE 100, the UK’s stock market index, has dropped to a four-week low of 8,152.00 points. Despite this recent decline, the index has demonstrated resilience over the past month with a 0.76% gain, and a notable annual increase of 9.9%. This indicates underlying strength in the UK market despite temporary fluctuations.
France
France's CAC 40 index has similarly dropped to a four-week low of 7,916.00 points. Despite this recent dip, the index has achieved a modest gain of 0.26% over the past month and has risen by 11.78% over the past year. This indicates that while the French market is currently facing lows, its long-term growth remains strong.
Japan
Japanese markets have also felt global pressures, with the Nikkei 225 Index declining by 1.3% to 38,054, and the broader Topix Index dropping 0.56% to 2,726. This downturn is driven by rising global bond yields and the anticipation of a potential interest rate hike by the Bank of Japan. The benchmark 10-year government bond yield in Japan has climbed to 1.1%, its highest level since July 2011, leading to a stronger yen and increased market caution.
China
China's Shanghai Stock Exchange Composite Index has fallen to a four-week low of 3,088.00 points. Over the past month, the index has dropped by 1.67%, and it has declined by 3.63% over the past year. This downturn highlights ongoing economic challenges and investor concerns in the Chinese market.
New Zealand
In New Zealand, the S&P/NZX 50 index fell by 1.04% to 11,557, reaching its lowest point in two weeks. This decline mirrors losses on Wall Street and coincides with the New Zealand government’s 2024 budget report, which offers modest tax relief and reduced spending to tackle sluggish economic growth and rising unemployment. The budget includes the first adjustment to the country’s tax threshold in 14 years, providing $14.7 billion in tax relief.
The outlook
Institutions like the IMF and Bloomberg have recently raised their global economic forecasts, boosting investor confidence. Strong economic indicators, especially in the US, support this positive outlook. Additionally, China shows signs of recovery, and Europe is beginning to exhibit promising economic activity. This synchronized growth across major economies enhances positive sentiment in international markets, despite likely elevated interest rates causing short-term volatility, according to Green.
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