June 2024 Financial Market Update: Key Insights and Analysis
Posted by
Marcus Boadle
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Welcome to the Rising Tide Market Update for the June quarter of 2024. In this blog, we’ll examine the global stock market’s performance using the Vanguard High Growth Index Fund as a proxy. We’ll provide commentary on market movements, highlight an interesting chart, and focus on a notable stock.
Market Performance Overview
The June quarter saw a flat performance, with the Vanguard High Growth Index Fund down a few basis points. This follows a robust 12-month period where the fund surged 145%, well above long-term averages. It’s not uncommon for the market to pause after such strong rallies, leading to a sideways movement during this quarter.
Key Movements in the June Quarter
- Hedged International Shares are up by approximately 2.5%.
- International Shares (in AUD), Australian Shares, and Bonds all declined slightly.
Despite these mixed results, global economies remained generally strong, though signs of a slowdown are emerging. Some regions, including parts of Europe and Canada, have lowered interest rates as inflation returns to expected long-term levels, creating a positive backdrop for stock markets.
Focus Areas for the Next Quarter
Two main areas to monitor as we move forward:
- Market Breadth: The US Stock Market (S&P 500) rose by 4.3% during the quarter, but the equal-weight index of all 500 companies fell by 2.6%. This indicates that a small group of large tech companies are driving market performance rather than a broad-based rally.
- US Election: The upcoming election in November is expected to introduce short-term volatility in the stock market.
Interesting Chart: Tech Giants’ Market Caps
The chart below illustrates the impressive growth of US tech giants Microsoft and Apple, each boasting market caps of over $3 trillion USD. These companies are now larger than the entire UK and German stock markets, driven primarily by advancements in AI and other technological innovations.
Stock in Focus: NVIDIA
One frequently mentioned company is Nvidia, which manufactures General Processing Units (GPUs). These are essential in laptops, phones, cars, and data centres. Nvidia leads the market due to significant growth in data centres, cryptocurrency mining, and AI. With a market cap of over $3.2 trillion and expected sales of around $100 billion in the next 12 months, Nvidia is a key player in the tech industry.
Conclusion
The June quarter showcased a mixed yet stable market performance, with important factors like market breadth and upcoming elections likely to influence the near-term outlook. For more detailed insights or any questions, feel free to contact the Rising Tide team!
