On Friday, stock markets edged up in the U.S. and were mixed in the euro area (advancing in the periphery and nudging down in the core).
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Global stock markets started the week with slight gains, after the Chinese President Xi Jinping sent a positive signal to the market saying he backs globalization and the opening up of China's market.
U.S. stock markets registered strong gains during the last day of the week due to economic optimism after the publication of the U.S. jobs report that showed a solid increase in employment, with 313,000 jobs created in February.
After the strong correction registered during the first weeks of February, global stock markets closed last week on a positive note with stronger increases in Europe than in the U.S., where they remained relatively stable on Friday.
Stock markets suffered losses for the third time in the week, with stronger declines in the Euro Area than in the U.S.
In the last session of the week, stock markets rose worldwide and sovereign yields ticked up in the U.S. and declined in the Euro Area.
Yesterday, stock markets rallied around the world while 10-year sovereign yields remained stable in the U.S. and declined in the Euro Area (particularly so in the periphery countries).
Stock markets posted strong increases in the U.S. while they were mixed in Europe during the last day of the week.
Stock markets were mixed in yesterday's session, with further gains in the U.S. and small declines in the Euro Area. In fixed-income markets, sovereign yields were stable ahead of the central bank policy meetings later this week.
Stock markets posted gains across Europe and the US, while sovereign yields moved in opposite directions as they recorded mild declines in the eurozone and moderate increases in the US.
Positive news on another COVID-19 vaccine sparked a rally in financial markets at the start of the week. As Moderna reported that its vaccine was 94.5% effective (data from a preliminary analysis of a large late-stage clinical trial), stocks surged across the world, led by sectors sensitive to mobility restrictions, while at-home tech equities declined.
Investors turned more cautious in yesterday's session. Stocks declined across Europe (at yesterday's EU leaders' videoconference there was no progress on the veto that is paralyzing the EU budget and the NGEU package), while U.S. stocks closed moderately higher amid reports that Congress will resume negotiations on a fiscal stimulus.
Markets ended the week on a cautious note, driven by a deterioration in investor sentiment towards the Middle East conflict and a selloff in tech stocks. Brent oil prices rose nearly 5% to close above $88 per barrel, and TTF gas surged towards €60 as the U.S. and Iran stepped up attacks across the Gulf.
Market sentiment remained downbeat due to persistent geopolitical tensions in the Middle East and continued weakness in AI-related market segments. In commodities, energy prices lacked clear direction, with Brent edging lower and TTF prices rising. The dollar strengthened modestly against the euro, on expectations of a resilient U.S. economy.
Risk appetite improved on Tuesday after US inflation surprised to the downside in June. The CPI print was driven by falling energy prioces but also softer core services, particularly shelter, overshadowing Warsh’s hawkish remarks in Congress, where he said he has "no tolerance for persistently elevated inflation". Interest rate expectations for the Fed declined, with markets now pricing a second hike over the next 12 months with a 70% probability.
Investors traded in a positive mood as the OECD signaled a brighter economic outlook. According to its updated forecasts, the world economy is set to grow by 5.6% and 4.0% in 2021 and 2022. The OECD estimates that spillovers from the U.S. fiscal stimulus will add more than 1pp to global growth.
Markets opened on a positive note after strong Nvidia earnings results, with a clear risk-on tone in Europe as equities rose and sovereign yields edged higher. But sentiment reversed sharply in the US after the European close, leading to a broad pullback in equities, with an intraday swing of nearly 5% in the Nasdaq, as the VIX hit its highest since April.
Stocks rose across the board as Biden's $1.9tn fiscal package won final approval in the U.S. Congress and CPI data calmed inflation worries. In particular, U.S. CPI inflation rose to 1.7% yoy in February but core inflation nudged down to 1.3% (see our take and why we expect inflation to be under the spotlight in the coming months here).
Yesterday's main news was the reopening of the US government after the largest shutdown in history. However, Treasury yields rose as markets priced a lower probability of a December rate cut amid lingering uncertainty over the inflation outlook and growing divisions among Fed officials.