📊 Macro-News round-up
#MarketNews
🌍 Happy Labor Day. Today is a public holiday in a multitude of countries, except in the UK, thanks to that, here we are once again to update you on the markets.
🇨🇳 China: yesterday’s PMI data confirmed that for the time being, China continues to show economic expansion in both the services and manufacturing sectors. However, in the case of services, somewhat worse than expected.
🌍 Europe: both France and Germany presented their GDP growth rate. In the case of France, the annualized growth rate was 1.1%, above the expected 0.9%. In the case of Germany, its annualized growth rate was -0.2%, with growth of 0.2% in Q1 2024. Spain, on the other hand, presents a growth rate of 0.7% for the same period. The European Union’s core inflation rate rose to 2.7%, compared to an expected 2.6%, but better than the 2.9% of the previous period. Headline inflation stood at 2.4%, up 0.6% in April.
🇬🇧 UK: Today, UK manufacturing PMIs come out slightly better than expected at 49.1. However, they worsen from the previous period, showing some contraction. This could encourage the Bank of England’s rate-cutting plans to go ahead.
🇺🇸 US: The policy rate is anticipated to stay between 5.25% and 5.50%. Interest rate reductions this year are no longer expected in light of the new disappointing inflation data, with the recent spikes in both the inflation rate and PCE. Not only that, but another set of data has also foreshadowed more resilient inflation. The ECI employment cost index rose to 4.2%. As we have pointed out in previous reports, inflation lies primarily in the labor-intensive service sector; if labour costs do not fall, inflation will probably not recede. If we know this, so does the Federal Reserve.
🇯🇵 Japan: The Yen, far from having recovered from Monday’s blow, where it fell to more than 30-year lows against the dollar, seems to be weakening again, currently trading at almost 158 USDJPY. Japan is entering a dead end. Its inflation rate is not going away and is rebounding from January, but at the same time, there are still fears of a slowdown in its economy. These two factors are sowing doubts in Japan’s central bank, forex traders are attacking the Yen in the face of the BoJ’s lack of determination and a Federal Reserve willing to maintain a strong dollar for the time being.
💹 Equity: Amazon’s results presented yesterday could dampen the mood on the stock markets. The nearly $2 trillion behemoth exerts a lot of influence on the world’s largest stock exchanges. Although cloud services performed well, the company’s revenue projection for the current quarter was below expectations. Perhaps because of this, we currently have a Mini SP500 Futures trading at 5050 points, tricking the recovery achieved, which had managed to put the SP500 back above 5100 points.
🌍 Geopolitics: With elections in Europe just around the corner, recently, in Germany, the right-wing AfD party, whose voting intentions have risen sharply in recent years, and which could be outlawed by the current government, has suggested strengthening national sovereignty and limiting EU competences to what is strictly necessary. The AfD considers that the EU is being transformed into a “European superstate” that would no longer be democratic. Therefore, they propose to dismantle the current form of the EU and transform it into a confederation of nation-states. It aims to keep the EU single market while cutting cohesion projects.
