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The US debt dispute is settled - US labour market in focus

In Washington, the compromise proposal in the dispute over the debt ceiling was approved by the Senate with 63 to 36 votes and can now be signed by US President Joe Biden. The averted US default will bring relief to the capital markets. The focus this afternoon will be on the latest labour market data in the US. Employment growth is expected to slow, which could give the Federal Reserve more room to pause interest rates. 

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
Jobs sign
© Schutterstock

On the New York Stock Exchange, stock indices rose on Thursday. The Nasdaq 100 exited the month's opening trading 1.31% higher at 14'441.51 points. The Dow Jones Industrial rose 0.47% to 33'061.57 points and the market-wide S&P 500 closed at 4'221.02 points (+0.99%). Following the settlement of the debt dispute in Washington, the focus today is now on the latest labour market data from the US. These will be crucial for the direction of the Fed's monetary policy. Analysts are forecasting an average of 180'000 new jobs created in May, a significant slowdown from the 253'000 non-farm payrolls reported in April. Meanwhile, the ten-year Treasury yield eased further to 3.6%.

In the US industry, business sentiment dimmed in May. The much-watched Institute for Supply Management (ISM) Purchasing Managers' Index fell slightly more than expected to 46.9 from 47.1, signaling a contraction in US manufacturing for the seventh month in a row.

Stock markets in the Asia-Pacific region were mostly higher before the end of the week. Hong Kong's Hang Seng Index rose 3.66%, leading gains across the region. In Tokyo, the Nikkei 225 gained about 0.6%. The Kospi in South Korea gained 1% after inflation fell to a 19-month low in May. The Shanghai Composite in mainland China gained 0.75% and the Shenzhen Component rose 1.5%.

Europe's main stock markets recovered some of their weekly losses so far on Thursday. The EuroStoxx 50 gained 0.94% to start the month. Meanwhile, inflationary pressures in the eurozone eased more than expected in May. Accordingly, the rate of consumer price inflation fell to 6.1% (consensus 6.3%) from 7.0% in April. On a monthly basis, consumer prices stagnated. Excluding energy and food prices, the core rate was 5.3%, down from 5.6% a month earlier. Despite the continued decline, inflationary pressures, especially in the core rate, are still likely to be too strong for the European Central Bank (ECB). Another rate hike is therefore expected on 15 June.

In the meantime, however, sentiment among industrial companies in the eurozone surveyed by S&P Global has deteriorated again. The purchasing managers' index fell for the fourth month in a row, from 45.8 to 44.8 points in May, and is now at its lowest level in three years.

Corporate news in focus: Richemont with annual figures and Alphabet's annual general meeting.

Economic data in focus: France industrial production April (08:45 CET) and from the US the monthly labour market report for May (14:30).


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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