VIX At Its Lowest Since February 2020

US stock markets exhibited a positive trajectory for the second week of June amid weak labour data. Initial jobless claims unexpectedly rose 28,000 to a seasonally adjusted 261,000 for the week ended June 3, the largest jump since October 2021, pointing to signs of cooling in the labour market. Looking ahead, market participants are eagerly awaiting the publication of two key inflation indicators next week. These crucial data points will provide valuable insights into the evolving inflationary pressures within the US economy.

All three major stock indexes finished the week in positive territory and volatility fell to its lowest level in more than three years on Friday, with the VIX index closing at 13.83.

The S&P 500 was up 0.39% at 4,298.86, marking its highest close so far this year. The tech-heavy Nasdaq edged up 0.14%, at 13,259.14, notching its seventh straight winning week. The Dow Jones rose 0.34% at 33,876.78. Small cap stocks managed to outperform their large cap peers with the Russell 2000 up 1.90% but the valuation gap remains high. The benchmark S&P 500’s year-to-date excess return to the Russell 2000 still amounts to +6.03%.   

By contrast, European stock markets bucked the trend. The MSCI EMU was down 0.63% while the FTSE 100 lost 0.59%.

In Asia, the Nikkei 225 index extended its winning streak to nine weeks (+2.35%) while the Shanghai composite was treading water, up 0.04%, as Chinese trade data points to sluggishness in the post-Covid recovery.

Consumer discretionary boosted by Tesla   

For the second consecutive week, the consumer discretionary sector emerged as the frontrunner (+2.44%) within the S&P 500 index, driven by a remarkable 14.22% surge in Tesla's shares (TSLA). Market participants celebrated the news of General Motors joining forces with the electric vehicle manufacturer to gain access to its extensive EV charging network. Energy, which has been the weakest performer among S&P sectors this year (-7.66%), managed to gain 1.71% during the week due to the upward trajectory of natural gas prices. Financials continued their recovery, initiated at the end of May, with an increase of 1.05%, bolstered by insider buying activities within U.S. regional banks.

Conversely, the IT sector experienced a slight setback of 0.66%, influenced by declines in Microsoft (MSFT down 2.57%) and Nvidia (NVDA down 1.42%). Despite the overall optimism surrounding the tech group, which remains the best-performing sector in 2023 (+34.91%), it may be prudent for it to take a momentary pause.

Coinbase hit by SEC’s crackdown   

The year-long tension between Coinbase Global, the largest US cryptocurrency exchange by trading volume, and the Securities and Exchange Commission (SEC) reached its climax this week as the regulator filed a lawsuit against the company for violating securities laws. This marks the second enforcement action taken by the US regulator against a major crypto exchange. Shortly before SEC charged Coinbase for operating as an unregistered securities exchange, broker, and clearing agency, it had sued Binance and its CEO Changpeng Zhao.

Coinbase experienced a substantial 17.46% decline in its shares throughout the week, reflecting the significant market impact resulting from these developments.

Bitcoin (BTC USD) steadied after falling more than 5% on Monday. The world's largest cryptocurrency lost 4.72% for the week, bringing its year-to-date performance to 56.33%.

Check the latest market updates for Crypto ETPs through the dedicated league tables.