Investors continued to trade in a mixed mood in yesterday's session. Commodity prices declined across the board while the USD strengthened. Stocks were mixed, advancing in Asia and Europe but declining moderately in the U.S.
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Investors started the week with a cautious mood as they wait for the release of this week's Q1 corporate results and the ECB monetary policy meeting.
In yesterday's session financial markets experienced risk aversion flows. Despite the positive results presented by some companies, the increase in COVID cases around the globe led investors to move from equities tied to the economic cycle to safer assets such as sovereign bonds, gold and safe haven currencies.
Yesterday, investors traded with cautious optimism after two days of consecutive declines in stock markets. The announcement that the German constitutional court will not initially block the NGEU package (€750bn) contributed to investors' optimism. Opposition argued that the EU was exceeding its powers by issuing such large amount of debt.
Global stocks tumbled on Tuesday, with the tech sector in Europe suffering its biggest drop since October, mirroring a selloff on the Nasdaq (-1.9%, sharpest fall since March). The decline was driven by comments from U.S. Treasury Secretary Janet Yellen warning that interest rates may need to rise to prevent the economy from overheating.
During a volatile session, markets erased some of the early gains after comments by Fed VP Richard Clarida noting that the central bank could start discussing in upcoming meetings adjusting the pace of asset purchases (tapering). In addition, house prices in the U.S. continued to accelerate while consumer confidence stalled.
Financial markets recorded another day with positive results, following the release of solid economic data in the U.S.: new jobless weekly claims fell to a new pandemic-era low and core capital goods orders rose by 2.3% in April, in both cases above expectations. U.S. Treasury Secretary Yellen also reiterated that the rise in inflation should be transitory.
In the last session of the week, global stocks remained near record highs lifted by the ongoing economic recovery from the pandemic and injections of fiscal and monetary policy stimulus.
In the last session of the week, investors traded with a positive mood amid robust employment data in the U.S. Non-farm payrolls rose by +559k in May (consensus expected +675k on average) and the unemployment rate dropped by 0.3 p. p. to 5.8%.
In the first session of the week, investors extended the positive tone seen during last Friday. In the euro area, economic data releases came in better than expected (EZ Sentix Investor Confidence rose in June to 28.0 from 21.0 and Spain's industrial production rose by 1.2% mom in April).
Financial markets extended the gains on Tuesday, with investors' sentiment boosted by dovish comments on inflation and monetary policy from some key Fed officials. As a result, stocks in the US fluctuated around record highs while the decline in US treasury yields stabilized. In Asia, equity indexes advanced further on Wednesday.
Investors ended the day with positive results, after strong sentiment data in Europe (Germany’s Ifo business climate index rose to the highest level in two years) and labour statistics in the US (new jobless claims fell to 411,000 weekly). In addition, President Biden announced a deal in the Senate on an infrastructure package worth USD 1.2 trillion.
Treasury yields fell as Federal Reserve Chairman Powell testified before Congress that rising inflation is likely to be transitory and that the central bank would continue to support the economy. The Bank of Japan left its 10-year bond yield target unchanged at about 0% after concluding its meeting and also kept the policy-balance rate at -0.1%.
In yesterday's session, investors' sentiment improved and recovered from Monday’s lows amid upbeat corporate results. Stock indices in the euro area and in the US rose as traders bought the dip (the S&P 500 registered its biggest daily increase since March).
Markets ended the week in a mixed mood (stocks declined, safe-haven currencies rose) as investors closed positions ahead of low trading in August. The publication of the Financial Markets Daily Report will stop for a few weeks, but we will be keeping an eye on markets and be back by the end of August. We wish our readers a great summer break.
Investors started the week on a positive mood, favoring risky assets amid supportive economic releases. Volatility declined, stock markets rallied across advanced and emerging economies, most currencies strengthened against the USD and commodity prices rebounded on the back of positive market sentiment.
Investors extended their risk apetite amid positive global manufacturing PMI releases. In August, factory activity remained strong in most economies, but several surveys continued to signal disrupted supply chains and labour shortages as the main risks. In the U.S., the input price index fell from 85.7 points towards 79.4.
Financial markets recorded a positive start of the week, as investors increased the likelihood that the Fed will postpone the decision about when to start tapering its asset purchases.
In a session with a Triple witching hour in the U.S., an event that usually increases volume and volatility as several futures and options expire simultaneously, stock indices declined in the euro area and in the U.S. while sovereign yields edged moderately up on both sides of the Atlantic.
Markets ended the week in a mixed mood as investors pondered over the Fed's plans for stimuli withdrawal, risks from China's Evergrande and the announcement that Chinese authorities will ban all transactions and mining related to cryptocurrencies. Global stocks declined or closed flat while the USD rose against most AE and EM currencies.