Welcome to this week’s Market Wrap. It’s been a quiet week and a generally quiet month for equities - which comes as a relief from some of the wild steps down we’ve suffered recently. News on Friday that US inflation was slightly lower in April than March (4.9% versus 5.2%) was in line with expectations but nonetheless gave more impetus to headlines pondering whether the recent sell off is starting to ease.
Index changes
This Week | 1 Month | 1 Year | |
FTSE 100 | +0.8% | +2.0 | +7.9% |
FTSE AIM All Share | +0.2% | -5.0% | -22.8% |
S&P 500 | +2.1% | -2.8% | -3.2% |
FTSEuroFirst 300 (ex-UK) | +1.7% | -1.0% | -2.7% |
S&P/ASX All Ordinaries | +0.2% | -1.8% | +0.9% |
Source: Stockopedia, London Stock Exchange
Financial headlines
Friday’s US inflation figures naturally pushed stocks higher. On the UK side of the pond the closely watched and heavily US tech-led Scottish Mortgage Investment Trust (LON:SMT) finished the day up 6.7%. Scottish Mortgage is one of the UK market’s largest trusts, helped in part by huge gains from a conviction bet on Tesla (NSQ:TSLA) over several years. That stake was slashed in early 2021, but the Baillie Gifford trust remains an intriguing barometer of sentiment towards US large-cap tech. As you can see, it’s been a bit of a rollercoaster of late…
Elsewhere, this tweet from Dylan Grice caught my eye…
Dylan is a widely respected strategist who runs his own fund firm, Calderwood Capital. Among previous roles he worked with Albert Edwards in the very quant-focused global strategy team at Societe Generale. His comment in that tweet captures a sense that while the recent sell off has been hard on investors, it could all amount to just noise in the long run. Grasping at 10%, 20%, 25% drawdowns as some sort of cast-iron evidence that we’re in a bear market may not, in time, reflect the true feelings of investors. Indeed, the market seems to be looking for reasons to be happy… so we’re not quite in the desperation and panic phases just yet.
And with that in mind… has the Alternative Investment Market (AIM) bottomed out?
Well obviously it is far too early to say. From a technical perspective, it’s just too soon to know if this week’s flat performance is the bottom or just a breather before more bad news. But after months of downward pressure, there’s at least a sense the market might perhaps stabilise…
