Technology boom leads global markets in first half of 2024

The unstoppable march of mega-capital, sluggish central bank changes, abundant political palpitations and the return of mergers and acquisitions (M&A) have made the first half of 2024 another whirlwind in global markets.

The unstoppable march of mega-capital, sluggish central bank changes, abundant political palpitations and the return of mergers and acquisitions (M&A) have made the first half of 2024 another whirlwind in global markets.

Forecasts of a wave of global interest rate cuts may not have materialized, but Nvidia and the rest of the Magnificent 7 have increased their market value by $3.6 billion.

MSCI's 47-country world equity index is up a robust 11% since January. Well, yes, but it doesn't compare to the 30% jump of the tech team, or the impressive 150% gain of chip champion Nvidia.

"30% of the S&P's returns this year came from Nvidia alone," said Chris Metcalfe, chief investment officer at IBOSS Asset Management, noting that it is now the most expensive stock in the world's most expensive market.

It is not only in the equity markets that milestones have been reached.

The Japanese yen has fallen to its lowest level in 38 years against the dollar in foreign exchange markets. Cocoa has had one of its best runs in history, while French bond risk has exploded to its highest level since the euro crisis after French President Emmanuel Macron was defeated by the far-right in EU elections, prompting him to call early parliamentary elections, the first round of which was held on Sunday.

Government bonds were already having a tough time anyway. Predictions of an avalanche of rate cuts turned out to be just a trickle in parts of Europe and emerging markets and certainly not in the U.S. yet.

As a result, anyone holding a basket of benchmark bonds has lost about 1.5% of their money.

"At the end of last year, markets were expecting seven (U.S.) rate cuts and now they expect only one or two," said Nadege Dufosse, head of multi-asset at Candriam. "That has been the big driver and explains the (poor) performance."

A shaky performance by U.S. President Joe Biden in his latest televised debate against Donald Trump has substantially increased the uncertainty of the November U.S. election.

There is also a general election in Great Britain on July 4, although no major market movements are expected, despite it almost certainly being the first change of government in 14 years.

Polar Capital fund manager Georgina Hamilton explained that this is because, unlike in France and the U.S., the two leading candidates to lead the U.K. are quite centrist.

"Having had quite a bit of turbulence in recent years ... you can't underestimate that calmer political context," he added.

Collaboration: Grupo Auge | Reuters (International).