Author — Martin Young, CEO of Farringdon Asset Management

Global Macro Review

• With the first half of the year now over, the MSCI All-World index is up 10.3%.

• There is an imbalance between the US (up 14.8%) and the rest of the world (4%).

• Major drivers are positive earning released by large conglomerates and assumption that inflation is beaten.

US Markets

• The S&P 500 has rewarded investors in companies that have capitalized on generative AI through unexpectedly high revenue growth.
• Nvidia enjoyed 262% revenue growth and a 57.1% net margin in the April 2024-ending quarter which accounted for 30% of the S&P 500’s total return in the first half of 2024.
• Revenues are coming from a huge market for AI chips.
• Business for Nvidia is expected to double from $200 billion in 2023 to $400 billion by 2027.
• The latest Personal Consumption Expenditure deflator figures for May, published Friday, confirm that the Federal Reserve’s favoured inflation gauge is steadily declining.
• Both the core PCE — excluding particularly variable items — and the trimmed mean produced by the Dallas Fed, which excludes outliers and takes the average of the rest, are now below 3%.
• The financial ratios are above target, but the direction of travel seems clear.
• The Absolute Strategy survey reported that there is little fear among asset allocators that corporate profits will come down in 2025.

European Markets

• French markets rallied and the euro gained on bets Marine Le Pen’s National Rally was poised to win the first round of France’s legislative election with a smaller margin than some polls had indicated.
• CAC 40 stock futures jumped almost 3% and the euro climbed 0.6% to $1.0772, its strongest level since mid-June.
• France’s 10-year bond edged up, narrowing the yield spread over German notes to 73 basis points, the lowest in two weeks.
• A gauge of European credit risk dropped to its lowest level since June 13.

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Farringdon Capital Ltd is incorporated in the Dubai International Financial Centre (DIFC) under number 4190, and regulated by the Dubai Financial Services Authority (DFSA).

The information contained in this document is for information only and should not be taken as a recommendation to buy or sell. Investors are reminded that past performance is no indication of future performance.