On the New York Stock Exchange, the indices reached new highs on Friday in view of positive labor market data. The S&P 500 closed +0.71% higher at 4,352.34 points, gaining +1.7% over the week. The Dow Jones Industrial lagged slightly and ended last week with a daily gain of +0.44% at 34,786.35 points. The past week thus brought the Dow a plus of about one percent. On the Nasdaq technology exchange, the Nasdaq 100 selection index achieved a daily gain of +1.15% and a solid gain of +2.7% over the week. As the capital markets in the US remain closed today following yesterday's national holiday, Europe's stock exchanges are likely to start the week on a rather subdued note.
The oil cartel Opec and its partner countries (Opec+) will continue talks today on the production quotas that will apply from August. Negotiations had been postponed on Friday following differences over which country would be allowed to produce how much in the future. In principle, the cartel wants to raise its production gradually from August to the end of the year in view of the expected economic upturn. At the center of the talks is a dispute between Saudi Arabia and the United Arab Emirates. While the Emirates want to raise production sharply, the Saudis are more cautious.
The US economy added more jobs than expected in June. According to the report published Friday, 850,000 new jobs were added. Analysts had forecast an average increase of 720,000 jobs. More jobs were filled primarily in leisure and hospitality, retail trade and education. By contrast, the unemployment rate recorded in a separate survey climbed to 5.9% in June from 5.8% a month earlier. Economists had hoped for a drop to 5.6%. Overall, the US economy and the labor market appear to be recovering further from the pandemic-related slump. However, the Fed is not under any immediate need to act, as continues to lack many millions of jobs since the beginning of the corona crisis.
The International Monetary Fund (IMF) expects the Federal Reserve to start reducing its securities purchases as early as mid-2022. The background to this, it says, is the ongoing economic recovery, uncertainties in the inflation outlook and the expectation of additional fiscal support, which justify an adjustment of monetary policy. According to the IMF, it is highly likely that the Fed will raise key interest rates as early as the end of 2022 or the beginning of 2023. In view of these assumptions, the IMF revised its growth forecast for the US economy. In the current year, an annualized GDP rate of +7.0% (previously +6.4%) is now expected. For next year, the IMF is forecasting growth of +4.9% (previously +3.5%). As a result, the unemployment rate is expected to fall to 4.4% in 2021 (from the current 5.8%, which was also in line with the previous forecast) and to 3.1% in 2022 (previously 4.2%).
Producer prices in the euro area rose by +9.6% on an annual basis in May, the strongest increase since the start of monetary union in 1999. In April, the rate of producer price inflation had been +7.6%. The price trend remains marked by production bottlenecks and supply difficulties in global trade.
|00:00||US||National Holiday (Independence Day, 4th of July)|
|08:45||FR||Industrial Production (May, m/m)||-0.1%|
|09:15||SP||IHS Markit PMI Services (June)||59.4|
|09:45||IT||IHS Markit PMI Composite (June)||55.7|
|09:50||FR||IHS Markit PMI Composite (June)||57.1|
|09:55||GE||IHS Markit PMI Composite (June)||56.2|
|10:00||EZ||IHS Markit PMI Composite (June)||57.1|
|10:30||EZ||Sentix Investors' Economic Outlook||28.1|
|10:30||UK||IHS Markit PMI Composite (June)||62.9|
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Source: LGT Bank (Switzerland) Ltd.
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