US:
U.S. stock indexes, including the NASDAQ and the S&P 500, surged to new record highs fueled by renewed enthusiasm over artificial intelligence, with the NASDAQ leading with a 2.4% weekly return. May’s robust job growth figure of 272,000 surpassed economists’ expectations, alongside wage growth, complicating predictions for potential interest rate cuts. Large-cap growth stocks outperformed their value counterparts, maintaining their year-to-date leadership. Despite a temporary dip, the 10-year U.S. Treasury bond yield rose following the strong jobs report. However, U.S. crude oil prices experienced volatility, dropping to a four-month low before recovering slightly. Small-cap U.S. stocks continued to underperform compared to their large-cap counterparts.
EU:
The pan-European STOXX Europe 600 Index rose 1.04% after the European Central Bank (ECB) cut interest rates for the first time in five years. Major European stock indexes recorded gains, with Italy’s FTSE MIB up 0.49%, Germany’s DAX up 0.32%, and France’s CAC 40 up 0.11%, while the UK’s FTSE 100 slipped 0.36%. The ECB reduced its deposit rate by a quarter point to 3.75% but did not hint at further cuts, citing strong domestic price pressures. ECB President Christine Lagarde noted a mixed inflation picture and emphasized the importance of data in future rate decisions. The ECB revised its inflation forecasts upwards for 2024 and 2025.
AU:
In Australia, GDP increased slightly by 0.1% in the first quarter, although per capita GDP declined. The current account balance shifted to negative territory in Q1 due to a decreased trade surplus, but there was a rebound in the goods trade surplus in April. New home loans exceeded expectations in April. RBA Governor Michele Bullock stated during a Senate committee testimony that the RBA will disregard the immediate effects of the energy bill rebate on inflation rates. She emphasized the RBA’s readiness to raise interest rates again if necessary.
Fund Performance:
Returns relative to the ASX 200 Index, resulting in -2.3% for the month so far.
This week, our primary focus was on launching our core ‘MaxRen’ system, but we encountered some challenging price movements right from the start. The ASX200 (SPI) futures and US 10yr Bond (ZN) futures were particularly troublesome, while we observed positive outcomes in the AUD/USD and AU 3yr Bond (YM) futures markets.
It’s important to highlight that within our current range of products including AUD/USD, US 10yr Bond, AU 10yr Bond, AU 3yr Bond, US March 2026 Interest Rate, AU September 2025 Interest Rate, and the ASX200, there will be variations in returns. Despite managing risk at the lowest feasible level, in comparison to our capital base, we remain undercapitalized, resulting in larger relative fluctuations. If we were at an optimal capital base, our performance for the week, which saw a -2.3% decrease, would have been -1.6%.
Looking ahead to next week, we anticipate engaging with intriguing opportunities in the NZD, USD, AUD rates, and US Equities markets, aiming for more structured risk exposure.