InvestMacro

At the end of Wednesday, the Dow Jones Index (US30) fell by 0.02%. The S&P 500 Index (US500) rose by 0.47% and reached a new all-time high. The Nasdaq Technology Index (US100) closed higher by 0.73%. Markets were buoyed by strong gains in technology stocks and news of a trade agreement between the US and Vietnam. President Donald Trump announced on Wednesday that the US would impose 20% tariffs on imports from Vietnam under a new trade deal struck in last-minute negotiations. Previously, Vietnamese goods were to be subject to 46% duties starting next week as part of the “reciprocal” tariff policy introduced by Trump in April. Meanwhile, other major economies, such as the EU and Japan, are still trying to conclude their own agreements with the US.

The latest ADP data showed that private sector employment unexpectedly declined in June, the first decline in more than two years, raising new concerns about the strength of the labor market and supporting the case for monetary policy easing.

Today, important data on the US labor market will be released in the US, namely the Non-Farm Payrolls report. The publication date has been moved up a day due to the US holiday on Friday, July 4 (Independence Day). If the data is in line with analysts’ expectations, such a report will indicate a continuing slowdown in the labor market, but without a sharp deterioration. Higher wage growth rates may alarm the Fed in the context of inflationary pressure, reducing the likelihood of an early easing of monetary policy. The market reaction is neutral for both the US dollar and gold and stocks. A weak labor market report may reinforce expectations of a Fed rate cut in the coming months. We can expect a negative reaction from the US dollar, growth in risk assets (EUR, GBP, AUD), growth in stock indices and gold.

Stock markets in Europe were mostly up on Wednesday. The German DAX (DE40) rose by 0.49%, the French CAC 40 (FR40) closed up 0.99%, the Spanish IBEX35 (ES35) added 0.41%, and the British FTSE 100 (UK100) closed down 0.12%. The Frankfurt DAX Index rose by about 0.5%, interrupting two days of losses, amid growing expectations of a positive outcome to trade negotiations. The US is reportedly insisting on introducing 10% tariffs, while the EU is seeking exemptions for sectors such as alcohol, aircraft manufacturing, pharmaceuticals, and semiconductors. Meanwhile, ECB officials at the Sintra summit expressed growing concern that the strengthening of the euro could affect inflation.

WTI crude oil prices fell below $67 a barrel on Thursday, cutting gains from the previous session, as an increase in US crude oil inventories heightened concerns about weak demand from the main consumer. Official data showed that crude oil inventories rose by 3.85 million barrels last week, defying expectations of a 2 million barrel decline and marking the largest increase in three months. Adding further pressure is the fact that OPEC+ appears set to increase production by 411,000 barrels per day in August, bringing the total increase through 2025 to 1.78 million barrels per day, equivalent to more than 1.5% of global demand.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) fell by 0.56%, China’s FTSE China A50 (CHA50) rose by 0.11%, Hong Kong’s Hang Seng (HK50) added 0.62%, and Australia’s ASX 200 (AU200) showed a positive result of 0.66%.

The Bank of Japan should resume raising rates after a temporary pause to assess the impact of US tariffs on the Japanese economy, a BoJ board member said on Thursday. According to Takata, Japan is approaching its 2% inflation target, helped by strong corporate earnings, labor shortages, and wage growth. He also warned that if the Fed resumes cutting rates, it could reduce the Bank of Japan’s policy flexibility. However, Takata sees no signs of a recession in the US.

The Australian dollar fell to $0.657 on Thursday, ending a three-session winning streak amid weak trade data. Australia’s trade surplus narrowed sharply to 2.24 billion Australian dollars in May, well below expectations of 5.09 billion Australian dollars and the revised figure of 4.86 billion Australian dollars in April. This was the smallest surplus in nearly five years, with exports falling to a three-month low due to weaker shipments from the US, which were affected by tariffs. Additional pressure came from data on the PMI index in the services sector of China, Australia’s main trading partner, which fell to a nine-month low and failed to meet expectations.

At the end of Tuesday, the Dow Jones Index (US30) rose by 0.91%. The S&P 500 Index (US500) fell by 0.11%. The Nasdaq (US100) Tech Index closed down 0.82%. The US stocks closed mixed on Tuesday after the Senate passed President Trump’s massive budget bill, while investors also kept an eye on trade developments. Enthusiasm about potential economic stimulus was tempered by concerns about the bill’s multi-trillion-dollar cost. The bill is projected to increase the national debt by $3.3 trillion. Tesla fell by 5.3% after Trump escalated his feud with Elon Musk, threatening to strip him of federal subsidies. Fed Chairman Jerome Powell maintained a cautious tone on rate cuts, noting tariff-related inflation risks and emphasizing the need for additional data.

European stock markets were mostly lower on Tuesday. Germany’s DAX (DE40) fell by 0.99%, France’s CAC 40 (FR40) closed down 0.04%, the Spanish IBEX35 (ES35) Index fell by 0.03%, and the British FTSE 100 (UK100) closed positive 0.28%. European stocks fell on Tuesday amid trade uncertainty and doubts that the ECB will continue to cut interest rates. According to reports, the EU is open to a deal that would impose a 10% universal tariff on many types of exports, but is demanding concessions from the US in key sectors such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft. The head of the EU trade department is expected to lead a delegation to Washington this week to try to advance the negotiations. On the data front, preliminary figures showed the Eurozone inflation at 2%, as expected, and in line with the ECB’s target. Meanwhile, ECB chief economist Philip Lane said the recent cycle of Central Bank policy tightening was over.

WTI oil prices are holding steady at around $65 per barrel on Wednesday after rising in the previous session, as investors remain cautious ahead of OPEC+’s production decision. The group intends to increase production by 411,000 barrels per day in August, resulting in a total increase in production in 2025 of 1.78 million barrels per day — more than 1.5% of global demand. This move is seen both as a punishment for overproducers and as an attempt by Saudi Arabia to win market share from US shale fields and other countries.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 1.24%, China’s FTSE China A50 (CHA50) rose by 0.25%, Hong Kong’s Hang Seng (HK50) did not trade yesterday, and Australia’s ASX 200 (AU200) showed a negative result of 0.01%.

The Nikkei 225 (JP225) Index fell by 1.1% on Wednesday, marking the second consecutive day of losses for Japanese stocks. The decline came after US President Donald Trump threatened to impose 35% tariffs on Japanese imports in an attempt to pressure Tokyo into making trade concessions. Trump called negotiations with Japan “very tough,” repeating his criticism of the country’s unwillingness to accept American-made cars and rice. His comments heightened investor concerns, especially after Federal Reserve Chairman Jerome Powell said the Fed would have already cut interest rates if not for the inflationary impact of Trump’s tariffs.

On Wednesday, the New Zealand dollar traded around US$0.609, close to its highest level in more than eight months, helped by the general weakening of the US dollar. Meanwhile, investors are closely watching trade developments as many countries try to reach an agreement with the US before the July 9 deadline. In the domestic market, the Reserve Bank of New Zealand is expected to keep rates at 3.25% next week, with market prices indicating only a small chance of a 25 basis point cut.

The Australian dollar weakened to $0.656 on Wednesday, retreating from the previous session as weaker-than-expected domestic data dampened investor sentiment. The Australian Bureau of Statistics reported that retail sales rose 0.2% in May, higher than the revised April figure but below market expectations of 0.4% growth. The data reinforced expectations that the Reserve Bank of Australia will cut rates by 25 basis points to 3.60%, with markets increasingly pricing in the possibility of further easing in the second half of the year, which could see rates fall to 3.10% or even 2.85%.

At the end of Monday, the Dow Jones Index (US30) rose by 0.63%. The S&P 500 Index (US500) added 0.52%. The Nasdaq (US100) Technology Index closed higher by 0.64%. The S&P 500 (US500) and Nasdaq (US100) indices updated their historical highs, helped by strong performance from tech giants such as Microsoft and Meta, which also reached new highs. Optimism increased amid signs of progress in trade negotiations, as evidenced by Canada’s recent decision to cancel a digital services tax targeting US technology companies, which eased tensions that had been weighing on the markets. Investors remain focused on July 9, when President Trump’s tariff reprieve expires, and hope that additional trade deals will help avoid tariff escalation.

European stock markets were mostly down on Monday. The German DAX (DE40) fell by 0.51%, the French CAC 40 (FR 40) closed down 0.33%, the Spanish IBEX35 (ES35) added 0.16%, and the British FTSE 100 (UK100) closed down 0.43%. Inflation in Germany surprised with a decline, falling to 2% year-on-year in June from 2.1% in May and against market expectations of 2.2%. A separate report showed that retail sales fell 1.6% in May after declining 0.6% in the previous month, indicating continued weakness in consumer demand.

WTI crude oil prices fell to $64.7 per barrel on Tuesday, posting a second consecutive day of losses amid concerns about oversupply amid OPEC+ plans to increase production. The group is reportedly planning to increase production by 411,000 barrels per day in August, following similar increases in May, June, and July. If confirmed, the total increase in supply from OPEC+ would be 1.78 million barrels per day this year, equivalent to more than 1.5% of total global demand.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 0.84%, China’s FTSE China A50 (CHA50) added 0.09%, Hong Kong’s Hang Seng (HK50) fell by 0.87%, and Australia’s ASX 200 (AU200) showed a positive result of 0.33%.

The Australian dollar weakened to $0.656 on Tuesday after reaching seven-month highs in the previous session, as growing expectations of a rate cut at the Reserve Bank of Australia’s (RBA) July 2025 meeting put pressure on the currency. Markets are now pricing in a 95% probability that the Central Bank will cut its cash rate by 25 basis points to 3.60%, even if Wednesday’s retail sales data exceeds expectations. An additional argument in favor of easing monetary policy is the continued low consumer spending figures, which consistently fall short of the RBA’s expectations.

In early July, the Singapore dollar strengthened to around 1.27 per US dollar, its highest level since October 2014, supported by steady domestic policy adjustments, increased risk appetite, and a general weakening of the US dollar. The Monetary Authority of Singapore (MAS) recently took a balanced approach, slightly reducing the slope of the SGD nominal effective exchange rate corridor to reflect the slowdown in economic growth.

Annual inflation in Indonesia accelerated to 1.87% in June 2025 from 1.60% in May, slightly above market expectations of 1.83%, remaining within the Central Bank’s target range of 1.5% to 3.5%. Core inflation, which excludes food prices, fell to a five-month low of 2.37% from 2.4% in May and was below the consensus expectations of 2.44%.

On Friday, US stocks closed at record highs, thanks to optimism about upcoming trade agreements and growing expectations of interest rate cuts. At the end of Friday, the Dow Jones Index (US30) rose by 1.00% (+3.89% for the week). The S&P 500 Index (US500) added 0.52% (+3.41% for the week). The Nasdaq (US100) Tech Index closed up 0.39% (+4.17% for the week). Earlier in the day, markets rose on encouraging news of progress in trade with key partners, including a framework agreement with China. Although Trump’s unexpected comments about Canada briefly dampened sentiment, they failed to derail the broader rally.

As for Friday’s data, inflation expectations for the year ahead fell to 5% from 6.6% last month, which is even lower than the preliminary estimate of 5.1%. Long-term inflation expectations were also revised down to 4% from the preliminary 4.1% and compared to 4.2% in May.

The Canadian dollar (CAD) weakened to 1.37 per US dollar as new threats from the US regarding tariffs and trade policy uncertainty offset previous gains. President Trump’s announcement that he was ending all trade talks with Canada over a new digital services tax and his warning of inevitable retaliatory tariffs rattled exporters and undermined confidence in the economy’s imminent growth. Domestically, Canada’s economy contracted by 0.1% per month in April and May, highlighting its vulnerability to US tariffs and worsening the outlook for trade-sensitive sectors.

The Mexican peso (MXN) strengthened to 18.81 per US dollar, reaching ten-month highs amid easing geopolitical tensions, dovish signals from the Fed, and solid domestic fundamentals. Despite unemployment rising to 2.7% in May, the labor market remains historically tight, supporting consumption and incomes even with a slight contraction in GDP in Q1, supporting Banxico’s cautious accommodative stance.

Equity markets in Europe were mostly rising on Friday. The German DAX (DE40) rose by 1.62% (+3.40% for the week), the French CAC 40 (FR40) closed up 1.78% (+1.88% for the week), the Spanish IBEX35 (ES35) rose by 1.11% (+1.43% for the week), and the British FTSE 100 (UK100) closed up 0.72% (+0.28% for the week). The rally was supported by progress on the trade front, including the agreement between the US and China and the potential delay in the introduction of tariffs in Europe. On the corporate front, growth was broad-based, led by automakers. Porsche led the index with a 7.6% gain, followed by Daimler Truck Holding, BMW, Mercedes-Benz Group, Continental, and Volkswagen, with gains ranging from 3.9% to 6.1%.

WTI crude oil prices rose by 0.4% to $65.5 per barrel on Friday but posted their sharpest weekly decline in years amid a decline in geopolitical risk premiums. The market rose above $80 during the Iran-Israel conflict and then weakened after President Trump announced a ceasefire, easing concerns about supply disruptions from the region. The market refocused on fundamentals, including upcoming OPEC+ decisions and signs of strengthening summer demand.

Asian markets were mostly higher last week. Japan’s Nikkei 225 (JP225) rose by 4.94%, China’s FTSE China A50 (CHA50) added 0.62%, Hong Kong’s Hang Seng (HK50) increased by 4.07%, and Australia’s ASX 200 (AU200) showed a positive result of 0.10%.

The official PMI Index for China’s manufacturing sector from NBS rose to 49.7 in June 2025 from 49.5 in May, in line with expectations, but marking the third consecutive month of decline in business activity. The official PMI Index for China’s non-manufacturing sector from the NBS was 50.5 in June 2025, exceeding market consensus and May’s reading of 50.3. This was the highest reading since March, helped by the trade truce with the US and Beijing’s efforts to stimulate domestic demand and contain deflationary pressures.

The Australian dollar rose to $0.653 on Monday, helped by the continued weakening of the US dollar amid the Federal Reserve’s dovish stance and growing budget problems. In the domestic market, the monthly inflation rate calculated by the Melbourne Institute showed moderate growth in June, reversing the previous month’s decline and marking the fourth increase this year.

At the end of Thursday, the Dow Jones Index (US30) rose by 0.94%. The S&P 500 Index (US500) rose by 0.01% and reached a new all-time high. The Nasdaq (US100) Technology Index closed higher by 0.97%. The US stocks rose on Thursday thanks to easing geopolitical tensions, strong performance by tech giants, and growing expectations of interest rate cuts. Meanwhile, fresh economic data showed that the US economy contracted more than expected in the first quarter, by 0.5% on an annualized basis, while the trade deficit unexpectedly widened due to a decline in exports.

The Mexican peso strengthened to 18.86 per dollar, reaching a ten-month high, despite the Bank of Mexico cutting its rate by 50 basis points to 8%. Global investors are shifting to high-yielding emerging market assets after the Fed’s signals of patience pushed the Dollar Index to two-year lows, while Mexico’s real interest rate outlook remains one of the most attractive in the G20, given core inflation of 4.5% year-on-year and core CPI of 4.2%.

European stock markets were mostly higher on Thursday. Germany’s DAX (DE40) rose by 0.64%, France’s CAC 40 (FR40) closed down 0.01%, the Spanish IBEX35 (ES35) added 0.03%, and the British FTSE 100 (UK100) closed positive 0.19%. On Thursday, European stocks showed mixed dynamics, holding on to the losses of the previous session, as markets continued to assess the prospects for fiscal and monetary policy in the EU’s largest economies. Defense companies continued yesterday’s growth as investors continued to assess their earnings growth after NATO countries agreed to increase defense spending to 5% of GDP by 2035.

The US natural gas prices (XNG/USD) fell to $3.42/MMBtu, a five-week low, under pressure from rising production and a larger-than-expected increase in storage inventories. According to the EIA, US utilities added 96 billion cubic feet of gas to storage for the week ending June 20, marking the 10th consecutive week of above-average injections.

Asian markets were mostly lower yesterday. Japan’s Nikkei 225 (JP225) rose by 1.65%, China’s FTSE China A50 (CHA50) fell by 0.34%, Hong Kong’s Hang Seng (HK50) lost 0.61%, and Australia’s ASX 200 (AU200) showed a negative result of 0.10%.

Core consumer prices in Tokyo in June 2025 were 3.1% year-on-year, down from May’s 3.6% growth and below market expectations of 3.3%. This is the first slowdown in core inflation since February, although the figure still significantly exceeds the Bank of Japan’s 2% target, supporting expectations of further interest rate hikes. Bank of Japan Governor Kazuo Ueda recently signaled that the Central Bank may continue to raise rates if sustained wage growth supports consumer spending.

On Thursday, the New Zealand dollar rose to $0.606, continuing its rally for the fifth consecutive day and reaching its highest level since October 2024, helped by the general weakening of the US dollar and the recovery of global risk appetite. New Zealand’s Consumer Confidence Index rose in June, although some of its components remain weak and the index is still in pessimistic territory.