Everything down. Stocks ended the first half in the way they’ve been headed all year: down. The FTSE 100 was among the best performers, declining just 3% YTD. By contrast the Nasdaq Composite fell 30%. Yesterday the S&P 500 declined almost 1% to take its losses in 2022 to more than 20%. The DAX is down a fifth too, as is the CAC. It was the worst quarter for European stocks since 2020; and the worst start to a year for the S&P 500 since 1970. 

The tech wreck is kind of spectacular. ARKK is down almost 60% this year and among the worst performers of the last quarter were Tesla, Nvidia and Netflix. Pandemic stay-at-home stocks have had a drubbing – Peloton is down 95% from its all-time high, whilst Zoom is down 80% and Etsy 75% lower. But the worst performers over the quarter were the cruise and casino operators. 

Heavy: market sentiment remains subdued as the same old worries about inflation and recession circulate. European stock markets opened lower on Friday and risk remains subdued though there was an attempted move higher for the DAX and CAC as the first hour of trade progressed. Shares in Asia fell, though China’s manufacturing activity expanded at the fastest rate in 13 months. Oil has fallen sharply on the risk-off tone, whilst bond yields have also declined on a flight to safety. Copper down hard, also nickel, as industrial metals are being offered as recession fears dominate. Gold has fallen below $1,800 and Bitcoin is struggling for traction below $20k. This is a horrible market and those getting sucked into bonds will get burned…inflation is going to be lingering for a long time – plateau not peak.

Japanese shares led declines in Asia as the Tankan headline index fell from +14 last quarter to +9 versus expectations of a smaller drop to +13. China’s Caixin Manufacturing PMI beat expectations at 51.7 vs 50.1, expanding at its fastest pace in over a year. 

US core PCE inflation cooled to 4.7% from +4.9% but the market wasn’t paying any attention to any peak-inflation narrative…truth is that the inflation genie is out the bottle and it’s going to be extremely tough to put it back in. 

Natural gas prices plunged as inventories climbed. The shutdown of the Freeport LNG facility has enabled utilities to stockpile supplies. Prices dived 17% yesterday and are down more than 40% since the first week of June.