Financial markets remain optimistic despite coronavirus outbreaks in Asian countries

Last week, investors followed the change in the US nonfarm payrolls. In June, the US economy had been increasing the number of jobs for the sixth month in a row, with the job growth to 850,000 against the expected 720,000. However, the unemployment rate remained high, at the level of 5.9% (5.8% in May). Overall, the labor market data were better than expected. The S&P 500 and Nasdaq indices reached new all-time highs on Friday. This suggests that investors are confident that the Fed's easing policy will remain unchanged. On Wednesday, the FOMC meeting will take place, and that will show whether the Federal Reserve is ready to respond to such labor market data. It is a bank holiday in the US today due to yesterday's Independence Day celebration.

European stock indices closed Friday's trading without a single trend. Investors were evaluating the data on the US labor market. British indicator FTSE 100 decreased by 0.03%, German DAX added 0.3%, French CAC 40 and Italian FTSE MIB lost 0.01% each. Semiconductor manufacturing company and airline stocks (Air France-KLM, Deutsche Lufthansa AG, Ryanair Holding Plc, easyJet) became the leaders of the growth. Overall, the fundamental picture in Europe (except the UK) remains positive. Many European countries have closed their borders with Britain and do not let unvaccinated tourists in, so the situation with the epidemic in Western Europe will improve.

Oil prices continue to rise ahead of an important OPEC+ meeting this afternoon. OPEC+ representatives could not reach a consensus after the UAE representatives refused to increase oil production by 0.5 mln barrels per day. The situation remains tense.

Gold and silver are showing an upward trend again. Some central banks began to increase their gold reserves, so against the background of the remaining monetary policy of the Federal Reserve, this picture plays in favor of rising prices of precious metals.

In Asia, the situation with the Delta coronavirus strain remains tense. In Japan, the activity in the service sector has declined again, and this is the 17th month in a row. The Chinese PMI index was 50.3 in June, which is lower than the value of 55.1 in May. On Friday, Australia reported on the labor market data. Despite the restrictions due to the coronavirus, labor demand remains strong and the unemployment rate has decreased. In Australia, retail sales exceeded forecasts increasing by 0.4% in May, while new car sales remained unchanged in June.

Main market quotes:

S&P 500 (F) 4,352.34 +32.40 (+0.75%)

Dow Jones 34,786.35 +152.82 (+0.44%)

DAX 15,650.09 +46.28 (+0.30%)

FTSE 100 7,123.27 -1.89 (-0.03%)

USD Index 92.24 -0.35 (-0.38%)

• – Australa Retail Sales (m/m) at 04:30 (GMT+3);
• – Eurozone Service PMI (m/m) at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Canada BoC Business Outlook Survey at 16:30 (GMT+3);
• – OPEC+ Meetings, all day.

by JMarkets, 2021.07.05

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.