InvestMacro

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.14%, while the S&P 500 Index (US500) added 0.85%. The NASDAQ Technology Index (US100) closed positive by 1.58% on Thursday.

Factory inflation (PPI) in the US declined over the past month, another sign that overall inflationary pressures are cooling. But the labor market remains resilient, and this could be a trigger for the US Fed to raise rates even higher. The US jobless claims fell by 12,000 to 237,000 over the past week.

Federal Reserve Bank of San Francisco President Mary Daly said it was too early for policymakers to say they had done enough to bring US inflation back to target levels. The policymaker added that although the consumer price data released on Wednesday was “very positive,” she would take a “wait-and-see stance” as the Fed remains firmly committed to bringing inflation down to 2%.

Federal Reserve Bank of St. Louis President James Bullard, an influential US Fed official who called for aggressive interest rate hikes to combat the recent spike in inflation, has stepped down after 15 years in office. Bullard, 62, will step down completely on August 14 to become dean of the School of Business.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) increased by 0.74%, France’s CAC 40 (FR40) gained 0.52%, Spain’s IBEX 35 (ES35) added 0.33%, and the UK’s FTSE 100 (UK100) closed up by 0.32%.

The ECB’s monetary policy report from its June meeting confirmed that the ECB still believes policy tightening is necessary. As a result, another 25bp rate hike in July is a done deal. For the ECB to stop after that, it needs to see a further improvement in inflation dynamics, a transmission of monetary tightening to the real economy, including the labor market, and a downward revision of inflation forecasts. Committee officials do not consider a decline in inflation to be a sufficient condition for ending the tightening cycle if a robust labor market and strong wage growth prevail at the same time.

Oil prices rose in Asian trading on Friday and traded near 10-week highs on prospects of supply cuts amid disruptions in Libya and Nigeria. Oil markets rose sharply this week, following a decline in the dollar, as softer-than-expected US inflation data spurred bets that the Federal Reserve is close to peaking interest rates. In addition, the Organization of the Petroleum Exporting Countries (OPEC) highlighted rising global oil demand in 2023 in its monthly report released on Thursday.

Asian markets traded higher on Thursday. Japan’s Nikkei 225 (JP225) increased by 1.00% for the day yesterday, China’s FTSE China A50 (CHA50) jumped by 1.58%, Hong Kong’s Hang Seng (HK50) was up by 2.81%, and Australia’s S&P/ASX 200 (AU200) closed positive by 1.08%. On Friday, most Asian stocks continued to rise, ending a positive week amid signs of slowing inflation in the US. Hong Kong’s Hang Seng Index had its best weekly performance, rising nearly 6% as big tech stocks benefited from bets that the Chinese government will loosen its grip on the country’s largest internet companies.

Singapore’s economy grew slightly more than expected in the second quarter. GDP grew by 0.3% in the latest quarter, with Singapore avoiding a technical recession after GDP contracted by 0.4% last quarter. Singapore’s export sector is suffering badly due to slowing demand in China, a major trading partner.

Philip Lowe will not be reappointed as governor of the Reserve Bank of Australia (RBA). Michelle Bullock will take over as RBA governor in September. Ms. Bullock has been deputy governor of the bank since April 2022, having served since 1985.

S&P 500 (F)(US500) 4,510.04 +37.88 (+0.85%)

Dow Jones (US30) 34,395.14 +47.71 (+0.14%)

DAX (DE40)  16,141.03 +118.03 (+0.74%)

FTSE 100 (UK100) 7,440.21 +24.10 (+0.32%)

USD Index  99.43 −0.85 (−0.85%)

• – US FOMC Member Waller Speaks at 01:45 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
• – Eurozone Trade Balance (m/m) at 12:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

Stock indices closed higher on Wednesday due to cooling inflation in the United States. The consumer price level fell from 4% to 3% (3.1% expected) on an annualized basis. Core inflation (excludes food and energy prices) fell from 5.3% to 4.8% (5.0% expected). The sharp drop in inflation caused the dollar to fall to a 15-month low. Dollar weakness led most risk currencies, gold, and stock indices to rally. At yesterday’s stock market close, the Dow Jones (US30) Index was up by 0.25%, and the S&P 500 Index (US500) increased by 0.74%. The NASDAQ Technology Index (US100) closed positive 1.15% on Wednesday.

The US Treasury yields also declined following a weak inflation reading, as the data combined with signs of a cooling labor market spurred bets that the Fed is likely to soften its hawkish stance in the coming months. The probability of a rate hike at the July West meeting is 92%, while the probability of a hike at the September and November meetings is 14% and 26%, respectively.

On Wednesday, the Bank of Canada raised the overnight interest rate by 25 basis points to 5.00% and also extended its projected timetable for lowering Canada’s inflation rate to its 2% target by mid-2025. The Bank of Canada left little guidance on the way forward. At the press conference, the Bank of Canada Governor indicated that the improvement in overall momentum was largely due to lower energy prices rather than underlying pressures, hinting that restrictive policies will be in place for longer.

Equity markets in Europe were predominantly up yesterday. Germany’s DAX (DE30) jumped by 1.47%, France’s CAC 40 (FR40) gained 1.57%, Spain’s IBEX 35 (ES35) added 1.37%, and the UK’s FTSE 100 (UK100) closed positive by 1.83%.

UK GDP showed no growth for the second quarter of 2023. On an annualized basis, the economy contracted by 0.4%. Manufacturing fell by 0.6% in May 2023 after falling by 0.2% in April 2023. The construction sector fell by 0.2% in May 2023 after falling by 0.9% in April 2023. Services output showed no growth in May 2023 after rising by 0.3% in April 2023. Overall, economic conditions continue to deteriorate, which could pose a challenge for the Bank of England to further fight inflation.

Gold rose sharply yesterday amid a falling dollar and government bond yields. There are good growth prospects for gold as the US Fed is at the end of its tightening cycle. At the same time, silver shows better performance among precious metals.

Asian markets mostly traded higher on Wednesday. Japan’s Nikkei 225 (JP225) decreased by 1.04% yesterday, China’s FTSE China A50 (CHA50) was up by 0.15%, Hong Kong’s Hang Seng (HK50) added 1.14%, and Australia’s S&P/ASX 200 (AU200) closed positive 0.81% for the day.

In Japan, conditions for rising inflation are emerging, which puts pressure on the Bank of Japan to abandon its multi-year soft monetary policy. Markets are already betting on the Bank of Japan’s policy adjustment, which is reflected in the strengthening of the Japanese yen.

Last month, China’s exports contracted at the fastest pace since the COVID-19 pandemic began. Exports contracted by 12.4% year-on-year in June after falling by 7.5% in May. Imports fell by 6.8%, which was stronger than the 4.0% decline expected and the 4.5% drop in the previous month. The data indicate that China’s economic recovery has slowed after a strong first quarter, and analysts are now downgrading their forecasts for the economy for the rest of the year as factory output slows amid continued weak global demand.

S&P 500 (F) (US500) 4,472.16 +32.90 (+0.74%)

Dow Jones (US30) 34,347.43 +86.01 (+0.25%)

DAX (DE40)  16,023.00 +232.66 (+1.47%)

FTSE 100 (UK100) 7,416.11 +133.59 (+1.83%)

USD Index  100.28 −1.08 (−1.07%)

• – China Trade Balance (m/m) at 06:00 (GMT+3);
• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK Trade Balance (m/m) at 09:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By George Prior

The US Federal Reserve won’t be swayed and will raise interest rates this month despite inflation coming in cooler than expected, says the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

Nigel Green of deVere Group’s warning comes as the latest US CPI comes in lighter than economists predicted.

He says: “Despite the data showing that the battle against inflation in the world’s largest economy is being won, we expect the Federal Reserve will resume its interest rate hiking agenda this month.

“The central banks’ officials will argue that there is still work to be done to tame inflation and they are unlikely to be dissuaded from their course of action for the time being.

“While we believe that the Fed will raise rates in July, there is now less justification for further hikes later this year.”

The deVere CEO is urging the US central bank not to raise interest rates past July.

“Investors are increasingly concerned that the Federal Reserve could with further hikes overtighten and that would steer the US economy into a major recession.

“The central bank must also ensure the broader picture is maintained and not be too cautious by overdoing the hikes, which would trigger the US recession deeper and longer.

“As the world’s largest economy, this would clearly have a serious, negative impact on the global economy.

“The most aggressive tightening campaign in decades is not quite finished – but the tide could be turning.

“Against this backdrop, a good fund manager will help you pick out the winners and losers to help you sidestep the risks to your wealth and seize the opportunities to build it for the long-term.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

By JustMarkets

On Tuesday, stock indices closed higher, helped by growth in the energy and technology sectors. At yesterday’s close, the Dow Jones Index (US30) increased by 0.93%, while the S&P 500 Index (US500) added 0.67%. The NASDAQ Technology Index (US100) closed positive by 0.55%.

Today, the US will release inflation data for June. Inflation is expected to fall from 5.3% to 5.0% year-over-year. Core inflation (excluding food and energy prices) is also expected to fall from 4% to 3.1% year-over-year. Although the issue of a rate hike at the July meeting is almost settled, traders are expecting a softer stance from the US Fed after the data release. Several Fed officials said yesterday that the Fed is nearing the end of its rate hike cycle, which sparked a rally in risk assets this week while also sending the dollar lower.

Shares of 3M (MMM) jumped nearly 5% after Bank of America raised its rating on the industrial and consumer products maker to “neutral” from “downgrade.” Wall Street’s major banks will kick off the second-quarter reporting season on Friday. Banks are expected to report higher profits in the second quarter as higher interest payments offset a downturn in deal-making. That said, JPMorgan (JPM) could lead the sector’s growth. Jefferies upgraded JPM to “buy” from “hold,” noting the strength of its balance sheet and earnings potential.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) rose by 0.75%, France’s CAC 40 (FR40) gained 1.07%, Spain’s IBEX 35 (ES35) added 0.81%, and the UK’s FTSE 100 (UK100) closed positive by 0.12%.

German inflation continues to rise. The consumer price level rose by 0.3% over the last month. In annualized terms, inflation rose from 6.1% to 6.4%. The ECB is likely to continue to hike until September, and then it will depend on new inflation and labor market data.

There are growing expectations that the oil market may tighten in the second half of the year, supported by signs of oil production cuts and Saudi Arabia’s recent pledge to cut production by 1 million barrels per day in July. These have contributed to the rise in oil prices in recent days. The US will also release crude oil inventories data for last week today, where a decline of 2.2 million barrels is expected.

Asian markets were trading higher on Tuesday. Japan’s Nikkei 225 (JP225) was up by 0.04% for the day yesterday, China’s FTSE China A50 (CHA50) added 0.56%, Hong Kong’s Hang Seng (HK50) increased by 0.97% for the day, and Australia’s S&P/ASX 200 (AU200) close positive by 1.50%.

The Chinese Communist Party-backed China Securities Journal reported on Wednesday that Beijing is likely to increase stimulus spending after a series of weak economic indicators in the country. Increased stimulus spending in China is expected to boost economic growth in the country, which in turn could boost oil demand amid rising domestic fuel consumption.

The Reserve Bank of New Zealand (RBNZ) left rates unchanged at 5.5% at its monetary policy meeting (MPC) today. Overall, the statement and minutes showed a dovish tone, raising the possibility that the RBNZ has ended the current tightening cycle, especially given the fact that the New Zealand economy is already in recession. The Reserve Bank said it expects core inflation to fall further from its peak and for core inflation to fall as capacity constraints ease. The Central Bank’s next monetary policy statement will be released on August 16.

S&P 500 (F) (US500) 4,409.53 +10.58 (+0.24%)

Dow Jones (US30) 33,944.40 +209.52 (+0.62%)

DAX (DE40)  15,673.16 +69.76 +(0.45%)

FTSE 100 (UK100) 7,273.79 +16.85 (+0.23%)

USD Index  101.75 −0.22 (−0.21%)

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
• – New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
• – Australia RBA Governor Lowe Speaks at 06:10 (GMT+3);
• – UK BoE Financial Stability Report at 09:00 (GMT+3);
• – UK BoE Gov Bailey Speaks at 11:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US FOMC Member Kashkari Speaks at 16:45 (GMT+3);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Canada BoC Press Conference at 18:00 (GMT+3);
• – US FOMC Member Mester Speaks at 23:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.62%, while the S&P 500 Index (US500) added 0.24%. The NASDAQ Technology Index (US100) closed positive by 0.18% on Monday.

The US consumer credit growth slowed to a more than two-year low in May, reflecting the first decline in volume since the pandemic began. Total loans rose by $7.2 billion. This figure, which excludes inflation, was below all forecasts. While low unemployment and steady wage growth have allowed many consumers to continue spending, persistently high prices are forcing others to save.

Societe Generale’s top economist says Central Banks are at the “end of the road” in fighting inflation. A resilient labor market and the apparent strength of the economy mean the US Federal Reserve is likely to raise the interest rate by 0.25% in July. According to CME Group’s FedWatch tool, the market rates the probability of a rate hike at 90%. Nevertheless, hedge funds have shifted to an overall bearish bet on the dollar for the first time since March, believing the Federal Reserve is nearing the end of its interest rate hike cycle. Over the past week, credit investors opened a net short position in the US currency of 20,091 contracts. A week earlier, their long position totaled 5,196 contracts.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) rose by 0.45%, France’s CAC 40 (FR40) gained 0.45%, Spain’s IBEX 35 (ES35) added 0.04%, and the UK’s FTSE 100 (UK100) closed up by 0.23%.

The UK government and the Bank of England “will do whatever is necessary, for as long as it takes” to bring inflation back to the 2% target, Treasury Secretary Jeremy Hunt said on Monday, reinforcing signs that interest rates will remain high for some time to come. UK inflation hit a 41-year high of 11.1% in October and is falling at a slower pace than in other major economies. Last month, the Bank of England unexpectedly raised its key interest rate by 0.5% to 5% after inflation held at 8.7% in May. Markets expect rates to peak at 6.25% or 6.5% later this year or early 2024.

On Sunday, French Central Bank governor François Villeroy de Galhau opposed a proposal to raise the European Central Bank’s inflation target to 2%. Villeroy, who sits on the ECB’s governing council, also said that interest rate hikes are close to the maximum and that rates will be held at elevated levels long enough for their impact on the economy to be felt.

Oil prices rose in Asian trading on Tuesday on the prospect of supply cuts by the world’s biggest oil producers, while expectations of expanded stimulus measures in major importer China also boosted sentiment. The prospect of supply cuts (Saudi Arabia and Russia have pledged to cut production further) is also bullish for oil prices. Nevertheless, caution over upcoming US inflation data and speeches from the Federal Reserve are holding back gains as markets want more information regarding the US Fed’s future trajectory.

Asian markets traded flat on Monday. Japan’s Nikkei 225 (JP225) decreased by 0.49% for the day yesterday, China’s FTSE China A50 (CHA50) added 0.70%, Hong Kong’s Hang Seng (HK50) was up by 0.89% for the day, and Australia’s S&P/ASX 200 (AU200) closed negative by 0.55%. Most Asian stocks rose sharply on Tuesday amid expectations that the Federal Reserve is close to ending its interest rate hike cycle for this year, while the prospect of additional stimulus measures from China also contributed to sentiment.

A string of weak economic data from China has caused bets to rise that Beijing will take additional stimulus measures to help support the slowing economic recovery. Inflation data on Monday showed that consumer spending is on the verge of deflation, sending mostly bearish signals for Asia’s largest economy. Shares in China’s big real estate developers rose on Tuesday after the People’s Bank said it would extend financial support for the sector until the end of 2024. But despite a slew of stimulus measures, China’s economy is still struggling to recover from COVID-era lows, and weak economic data over the past three months supports that view.

S&P 500 (F) (US500) 4,409.53 +10.58 (+0.24%)

Dow Jones (US30) 33,944.40 +209.52 (+0.62%)

DAX (DE40)  15,673.16 +69.76 +(0.45%)

FTSE 100 (UK100) 7,273.79 +16.85 (+0.23%)

USD Index  101.75 −0.22 (−0.21%)

• – Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US FOMC Member Bullard Speaks at 16:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By ForexTime

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustMarkets

On Friday, at the close of the stock market Dow Jones Index (US30) decreased by 0.55% (-0.56% for the week), S&P 500 (US500) lost 0.29% (-0.53% for the week). NASDAQ Technology Index (US100) closed negative by 0.13% on Friday (-0.43% for the week).

The US labor market added 209,000 jobs in June, while the unemployment rate fell to 3.6% from 3.7%. This number is slightly below economists’ expectations of 225,000 jobs. It’s also a slowdown from the previous month’s reading, which was revised downward by 33,000 to 306,000. But overall, despite some cooling, the labor market remains resilient. The Fed is keeping a close eye on labor market indicators and is concerned that demand for workers will drive more robust wage growth and, in turn, inflation. Therefore, the Fed wants to see an increase in unemployment first to end the tightening cycle.

Another concern for the Fed today continues to be the strong growth shown by the US service sector, as reflected by the ISM Manufacturing PMI, which showed a strong side of the economy in June compared to May. This could keep the service sector relatively strong if the sector does not slow in the second half of the year.

Equity markets in Europe traded flat on Friday. German DAX (DE30) gained 0.48% (-3.61% for the week), French CAC 40 (FR40) added 0.42% on Friday (-4.09% for the week), Spanish IBEX 35 (ES35) decreased by 0.36% (-3.68% for the week), British FTSE 100 (UK100) closed negative by 0.32% (-3.65% for the week).

European Central Bank Vice President Luis de Guindos expressed some optimism that core inflation may peak. A decline in core price growth could lead to a potential pause in rate hikes. But the politician also added that incoming data will also guide the ECB. Yannis Stournaras, governor of the Bank of Greece and one of the ECB’s most dovish policymakers, echoed this view Friday. European Central Bank President Christine Lagarde said Friday that the bank would not “stand idly by” if there were simultaneous increases in profits and wages, given persistently high inflation in the region.

On Sunday, French Central Bank governor François Villeroy de Galhau opposed a proposal to raise the European Central Bank’s inflation target to 2%. Villeroy, who sits on the ECB’s governing council, also said that interest rate hikes are close to the maximum and that rates will be held at elevated levels long enough for their impact on the economy to be felt.

Oil prices fell in Asian trading Monday as investors are cautious ahead of important US economic data on inflation this week, although expected crude supply cuts from Saudi Arabia and Russia will keep oil from falling.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) decreased by 3.37% for the week, China’s FTSE China A50 (CHA50) lost 2.19%, Hong Kong’s Hang Seng (HK50) fell by 3.35%, and Australia’s S&P/ASX 200 (AU200) was negative by 2.24%.

China’s inflation data for June showed a decline. Over the last month, consumer prices declined by 0.2%, and the annual Consumer Price Index remained unchanged at 0.2%. The producer price index, which shows the rate of inflation between factories and plants, fell from minus 4.6% to minus 5.4%, adding to deflationary pressures. On the other hand, deflationary momentum from China may help offset service-driven inflation in developed countries over time.

S&P 500 (F) (US500) 4,398.95  −12.64 (−0.29%)

Dow Jones (US30) 33,734.88 −187.38 (−0.55%)

DAX (DE40)  15,603.40 +74.86 (+0.48%)

FTSE 100 (UK100) 7,256.94 −23.56 (−0.32%)

USD Index  102.27 −0.90 (−0.87%)

• – China Consumer Price Index (m/m) at 04:30 (GMT+3);
• – China Producer Price Index (m/m) at 04:30 (GMT+3);
• – US FOMC Member Daly Speaks at 17:30 (GMT+3);
• – US FOMC Member Mester Speaks at 18:00 (GMT+3);
• – US FOMC Member Bostic Speaks at 19:00 (GMT+3);
• – UK BoE Gov Bailey Speaks at 22:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

Stronger-than-expected employment data from ADP reaffirmed fears of further interest rate hikes by Federal Reserve policymakers. At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 1.07%, and the S&P 500 Index (US500) was down by 0.79%. The NASDAQ Technology Index (US100) closed negative by 0.82% on Thursday.

US employers announced 40,709 layoffs in June, down 49% from the 80,089 layoffs announced in May. Private sector jobs rose to 497,000 in June, much higher than the gain of 267,000 in May and much better than the estimated 220,000. At this point, the labor market is showing no signs of easing, giving the US Fed room to tighten further. Today in the US, the Nonfarm report will be released. Economists forecast that the US economy will add 200,000 jobs in June. The unemployment rate is expected to be 3.6% (now 3.7%), and average hourly earnings will be 0.3%.

Federal Reserve Bank of Dallas President Lorie Logan said yesterday that further interest rate hikes would likely be needed to stimulate meaningful disinflation and return the rate of price growth to the Central Bank’s target level. She added that forecasts from Fed officials showed two more interest rate hikes this year.

Stock markets in Europe were down yesterday. Germany’s DAX (DE30) decreased by 2.57%, France’s CAC 40 (FR40) lost 3.13%, Spain’s IBEX 35 (ES35) was down by 2.21%, Britain’s FTSE 100 (UK100) closed negative by 2.17%.

Head of the German National Bank Nagel said yesterday that, at present, the ECB does not see a threat of excessive policy tightening but does not know yet where interest rates will peak. Nagel also added that rates will remain restrained for an extended period.

Traders are betting on a Bank of England interest rate hike to 6.5% by March 2023. Raising the cost of borrowing to that level would put mortgages further in the Bank of England’s pain zone, making credit less available to businesses and dealing a sharp blow to the economy. It will also exacerbate the difficulties facing the government of Prime Minister Rishi Sunak in the run-up to next year’s elections.

Oil continues to fall in price amid fears of a rate hike. But amid signs of tightening supply and improving demand, oil still has a good chance of going higher. Data on Thursday showed US inventories declined more than expected, with a larger-than-expected drop in gasoline inventories pointing to improved demand for fuel during summer.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.86%, China’s FTSE China A50 (CHA50) was down by 0.82%, Hong Kong’s Hang Seng (HK50) lost 2.44% for the day, and Australia’s S&P/ASX 200 (AU200) closed negative by 1.25%.

In Japan, the wage hikes triggered by this spring’s labor negotiations have begun to take effect. Base wages rose by 1.8% in May compared to last year’s period, the most significant increase since February 1995. Wage growth is one of the key trends under scrutiny by the Bank of Japan (BOJ) as the Central Bank considers whether and when it should roll back its super-soft monetary stimulus. BOJ Governor Kazuo Ueda has repeatedly stressed the need for an accommodative policy until wages rise enough to support sustained price growth of around 2%.

New Zealand’s Central Bank is likely to keep interest rates unchanged at 5.50% next Wednesday and leave that level for the rest of the year, marking the end of its 20-month cycle of increases that have already driven the economy into recession. The country’s biggest banks – ANZ, ASB, Bank of New Zealand, Kiwibank, and Westpac – are not forecasting any rate changes next week.

S&P 500 (F) (US500) 4,411.59 −35.23 (−0.79%)

Dow Jones (US30)33,922.26 −366.38 (−1.07%)

DAX (DE40) 15,528.54 −409.04 (−2.57%)

FTSE 100 (UK100) 7,280.50 −161.60 (−2.17%)

USD Index 103.36 +0.32 (−0.04%)

• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+3);
• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – UK BoE Gov Bailey Speaks at 10:30 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (GMT+3);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 19:45 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.