In the run-up to the interest rate decision of the Federal Open Market Committee of the Federal Reserve expected tonight at 20:00 (CET), the stock market indices trended mostly sideways. The Dow Jones Industrial closed at 34'299.33 points, -0.27% lower. The S&P 500 fell by -0.20% to 4'246.59 points and the Nasdaq 100 had to accept a daily loss of -0.69% to 14'030.41 points after the record high reached the previous day. Similar is the stock market picture in Asia this morning and in Europe, investors are likely to remain cautious before the Fed decision.
Japanese exports rose 49.6% in May from the previous month, posting the strongest gain since April 1980 in the wake of the recovery from the corona crisis! This also marked the third consecutive month of growth in exports – most recently up +38% in April. In May, for example, exports of cars and car parts more than doubled – by over +130% over the year. Japan's exports shone particularly brightly in trade with the US. Proof that the domestic economy is also recovering is provided by the +27.9% rise in imports in May, which also increased for the fourth month in succession.
In Germany, consumer price inflation climbed in May to its highest level since September 2011, with the cost of living rising by +2.5% on an annual basis compared with +2.0% in April and +1.7% in March. The steady rise in prices was driven primarily by higher energy prices and, in the case of Germany, also by the CO2 tax introduced at the beginning of the year. In France, too, higher energy prices resulted in a higher inflation rate. Year-on-year, French consumer prices rose by +1.8% – the highest inflation rate since the end of 2018. The situation was different in Italy where, contrary to expectations, inflation did not accelerate further in May. The annual inflation rate in the “Bel Paese” remained unchanged at +1.2% month-on-month. On a monthly basis, Italian consumer prices declined by -0.1%.
On the sidelines of the meeting between US President Joe Biden and EU leaders, a compromise was reached in the long-running dispute over subsidies for Airbus and Boeing and mutual accusations of distortion of competition. Both sides agreed to suspend the mutually imposed punitive tariffs for five years, which will significantly defuse the trade conflict between the economic powers. EU Commission President Ursula von der Leyen spoke of a “breakthrough that opens a new chapter in relations.”
|08:00||UK||Consumer Prices (May, y/y)||+1.5%|
|14:30||US||Building Permits (May, m/m)||-1.3%|
|14:30||US||Housing Starts (May, m/m)||-9.5%|
|14:30||US||Import Price Index (May, m/m)||+10.6%|
|20:00||US||FOMC monetary policy announcement|
|20:30||US||Fed press conference & economic forecasts|
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Source: LGT Bank (Switzerland) Ltd.
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