June was an eventful month, marked by elections in Europe, India, Mexico, and South Africa. Populist promises and fiscally loose plans have fuelled debate and raised the risk of re-igniting inflation.

Unexpected election results in India, Mexico and South Africa temporarily shook markets. In India, Narendra Modi secured a third term, but lost his parliamentary majority. 

We have already seen a deluge of elections this year. Unforeseen results in South Africa, Mexico and India have led to heightened volatility. The UK general election is imminent, and France has shocked financial markets with snap elections to be held in early July.

Nvidia, the designer of the microchips that enable the generative AI boom, briefly became the most valuable company in the world. As its valuation touched $3.3 trillion, the company overtook Microsoft and Apple to take pole position.

The US Federal Reserve (Fed) kept interest rates on hold, with chair Jay Powell indicating that patience is needed to “let restrictive policy do its work”. The minutes of the Fed’s latest meeting showed some policymakers favouring a rate hike, although Powell signalled such a move was unlikely.

May has been a month for elections, with India, Mexico and South Africa all going to the polls. For India, early results indicate a continuation of the status quo, while in Mexico the first female president was elected by a landslide.

Demand for tickets to attend Taylor Swift’s global concert tour, known as the Eras Tour, has hit unprecedented heights. The frenzy is such that the impact on local and even national economies can be significant. So much so, that the US Federal Reserve (Fed) made mention of the Philadelphia concerts in its Beige Book for June last year.

President Biden announced a big jump in tariffs on imports of clean tech products from China. This includes a doubling of tariffs on electric vehicles to 100% and a hike to 50% tariffs on solar panels. Biden’s $18 billion of tariffs adds to the $300 billion imposed under the Trump presidency.

The ‘higher for longer’ rate mantra and growing speculation that the US Federal Reserve would delay cutting interest rates until the end of 2024 undermined equity and bond returns in April. Fears that the Israel/Hamas conflict would spread to the wider region escalated, although the oil price was little changed by month end.

With US jobs growth remaining strong and inflation proving stickier than expected, speculation grew that the US Federal Reserve (Fed) would delay cutting rates until the end of 2024.

In agricultural commodity markets, cocoa soared after adverse weather brought a poor harvest, forcing chocolate prices higher. Among precious metals, gold hit successive record highs, responding to sticky US inflation and uncertainty over the path of interest rates. 

Market expectations for US interest rate cuts have seen a sea change since the start of 2024. Confident forecasts of six quarter point cuts have shrunk to fewer than two cuts by year end. Some commentators even predict that rates will be forced to rise again, with options markets pricing a 20% chance of a rate hike. 

Key central banks suggested that rates would be cut this year and appeared less concerned about the possibility that inflation would rebound. The US Federal Reserve (Fed) kept rates on hold at its March meeting and maintained its guidance for three 25 bps rate cuts in 2024, with financial markets now readjusting to the Fed’s own projections.

The Swiss National Bank (SNB) became the first major central bank to reduce interest rates this cycle. The SNB reduced rates by 25 basis points (bps) to 1.5%, its first cut in nine years, after Swiss inflation fell to 1.2% in February, marking the ninth consecutive month that prices have been within the 0-2% target range.

Many words have been written about the transformative potential of the implementation of generative artificial intelligence (gen AI) across the industries and nations of the globe. 

The US House of Representatives has approved a bill to ban TikTok from US app stores, unless its Chinese parent ByteDance agrees to dispose of the app. Existing users would be excluded from future updates, meaning that TikTok would eventually become obsolete in the US. 

The latest headline inflation rates have slowed, but risks remain. US average hourly earnings ticked up at the beginning of the year, and job growth was far stronger than expected, with recent data also revised higher.

Hopes faded for interest rate cuts in March. While the US Federal Reserve and European Central Bank indicated that later rate reductions were possible, they stressed it was too early to consider such a move.