At the end of Friday, the Dow Jones Index (US30) fell by 0.22% (for the week +0.23 %), and the S&P 500 Index (US500) fell by 0.11% (for the week +0.94 %). The NASDAQ Technology Index (US100) closed negative 0.23% (for the week +1.59%). Stocks came under pressure after bond yields jumped on the back of a stronger-than-expected US payrolls report for May, which lowered expectations of a Fed interest rate cut. Nonfarm payrolls for May rose more than expected, and average hourly earnings for May unexpectedly accelerated, which was a hawkish factor for Fed policy.
The US nonfarm payrolls for May rose by 272,000, exceeding expectations of 180,000. The unemployment rate unexpectedly rose by 0.1 to 4.0% in May versus expectations of no change at 3.9%. The US average hourly labor compensation in May added 0.4% m/m and 4.1% y/y, which is stronger than expectations of 0.3% m/m and 3.9% y/y. Markets are pricing in a 25 bps chance of a 1% rate cut at the June 11–12 FOMC meeting and a 9% chance of a rate cut at the next meeting on July 30–31.
Equity markets in Europe were mostly down on Friday. Germany's DAX (DE40) was down 0.51% (for the week +0.29%), France's CAC 40 (FR40) lost 0.48% (for the week -0.84%), Spain's IBEX 35 (ES35) was down 0.34% (for the week +0.01%), and the UK's FTSE 100 (UK100) closed negative 0.48% (for the week -0.36%). Eurozone wages per worker in Q1, the ECB's preferred indicator, rose to 5.1% y/y, beating expectations of 4.6% y/y and accelerating from 4.9% y/y in Q4. The Bundesbank lowered its 2024 German GDP prognosis to 0.3% from a previous estimate of 0.4% and raised its 2024 inflation prediction to 2.8% from a previous one of 2.7%. Swaps discount the odds of a 25 bps ECB rate cut by 25 bps at 21% for the July 18 meeting and 52% for the September 12 meeting.
European stock markets opened lower on Monday as early results from EU parliamentary elections suggest right-wing populist parties could shape European politics for the next five years. French President Emmanuel Macron has also called for snap parliamentary elections later this month after a heavy defeat in the EU vote.
Oil (WTI) prices came under pressure on Friday as strong US jobs data prompted traders to cut expectations for a US rate cut, dampening the outlook for economic growth and energy demand. Demand for precious metals also declined as the US Central Bank ended a series of gold purchases, which had been one of the key triggers for the strong performance of this asset class this year. At the same time, the US imposed 50% tariffs on Chinese imports of solar panels, which is one of the largest industries for silver, putting pressure on panel production at key plants in Asia with corporate bases in China.
Silver prices (XAGUSD) fell to below $29.4 an ounce, retreating sharply from an 11-year high of $32 reached on May 28 and following a general decline in bullion prices as strong US economic data supported the Federal Reserve's hawkish outlook.
Asian markets were equally up and down last week. Japan's Nikkei 225 (JP225) decreased by 0.13%, China's FTSE China A50 (CHA50) lost 0.62%, Hong Kong's Hang Seng (HK50) was up 0.46%, and Australia's ASX 200 (AU200) was positive 2.06%.
Government officials searched the Tokyo headquarters of Honda Motor Co. on Monday. Japanese media report that raids will soon be conducted at Mazda Motor Corp. Toyota and Suzuki Motor Corp. have already been searched. Toyota Chairman Akio Toyoda apologized last week for widespread fraud involving the use of inadequate or outdated data in collision tests, improper testing of airbag inflation, rear-seat damage in crashes, and engine power.
S&P 500 (US500) 5,346.99 −5.97 (−0.11%)
Dow Jones (US30) 38,798.99 −87.18 (−0.22%)
DAX (DE40) 18,557.27 −95.40 (−0.51%)
FTSE 100 (UK100) 8,245.37 −39.97 (−0.48%)
USD Index 105.23 +0.35 (+0.33%)
- – Japan GDP (m/m) at 02:50 (GMT+3).
by , 2024.06.10
We advise you to get acquainted with the daily forecasts for the major currency pairs.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.
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