Market Monitor #1

Markets

In recent market news, Apple achieved an impressive milestone by reaching a market capitalization of $3 trillion.

This remarkable feat sets Apple apart as the only company to ever accomplish this, and it's worth noting that this is the first time Apple has closed at this valuation. Furthermore, this achievement contributed to the Nasdaq index, predominantly composed of technology companies, experiencing its strongest first-half performance in the last forty years.

In May 2023, Canada's annual inflation rate declined to 3.4% from the previous month's 4.4%. This decrease, the lowest since June 2021, aligns with market expectations and can be primarily attributed to base year effects related to Russia's invasion of Ukraine, which impacted global energy prices.

The outcome aligns with the Bank of Canada's projected scenario of inflation slowing down to around 3% by summer, raising uncertainties about the remaining extent of interest rate hikes in its tightening strategy. The slowdown can be largely attributed to a 2.4% decline in transportation prices, driven by a significant 18.3% drop in gasoline prices. Additionally, eased supply chain bottlenecks contributed to a lower inflation rate for durable goods, recording a 1% increase compared to the previous month's 2.2%. On the other hand, increased interest rates implemented by the Bank of Canada led to the most substantial hike in mortgage interest costs in history, with a 29.9% rise.

Meanwhile, the core inflation rate experienced a greater-than-expected slowdown to 3.7%. In terms of monthly changes, the Consumer Price Index (CPI) rose by 0.4%, following a 0.7% increase in April.

O Canada 🇨🇦

Green Skies Ahead?

The Dow Jones concluded with an impressive gain of nearly 270 points. The S&P 500 also saw a positive uptick of 0.4%, while the Nasdaq remained relatively stable. Recent data unveiled a revision of Q1 GDP growth from 1.3% to 2%, indicating a resilient economy. Additionally, a surprising decline in initial jobless claims last week has heightened expectations for further interest rate hikes from the Federal Reserve, aligning with Chair Powell's recent statements.

During a Banco de Espana Conference earlier this week, Chair Powell reiterated the necessity of increasing borrowing costs later this year, echoing his messages at the ECB Forum and the US Congress last week. The banking sector witnessed notable strength, with major lenders successfully passing the Federal Reserve's stress test. Bank of America (+2.1%), Wells Fargo (+4.5%), and Morgan Stanley (+1.5%) all made significant gains.

Furthermore, Sigilon Therapeutics experienced a staggering 440% surge following the news of its acquisition by pharmaceutical company Eli Lilly.

Boats, Boats, Boats!

While technology giants often dominate the financial headlines, there is another group of stocks that have experienced significant gains this year: cruise line operators.

Carnival (with a year-to-date increase of 136%) and Royal Caribbean (up by 113%) were among the top performers in the S&P 500 during the first half of the year, alongside companies like Nvidia, Meta, and Tesla. This growth can be attributed to the resurgence of sea vacations and the industry's recovery from the lows caused by the pandemic.

However, it is important to acknowledge the challenges that come with the cruising experience. Since January, there have been 13 reported norovirus outbreaks on cruise ships, marking the highest number in a single year since 2012, as reported by a reputable source. These incidents highlight the ongoing dynamics within the industry, with the year only halfway through.

Market Recap:

Last Week's Economic Insights

I'm a tool of great power, yet simple in design, I multiply wealth and can make fortunes align. With interest as my fuel, I grow over time, In lending and borrowing, my purpose will shine.

Banks and investors hold me dear, As I generate returns year after year. Compound in nature, I steadily accrue, A silent force that few truly construe.

Though intangible, I impact your wealth, A concept that brings both joy and stealth. What am I, this financial phenomenon? A key pillar of economic brawn.

What is the answer to this riddle?

So You Think You Know Finance?

Welcome to our weekly Finance Challenge section! In this segment, we present you with a new finance-related question or riddle each week to test your knowledge and understanding of the financial world. This week, we have a thrilling riddle that will challenge your finance prowess. Submit your answers below for a chance to be featured in our upcoming article and be added to the community leaderboard.