The US Labor Department reported Friday that US employers added 372,000 jobs in June, about 100,000 more than economists had expected. Meanwhile, the unemployment rate remained at 3.6 percent for the third month. As the stock market closed Friday, the Dow Jones Index (US30) decreased by 0.15% (+1.95% for the week), and the S&P 500 Index (US500) lost 0.08% (+3.13% for the week). The Technology Index NASDAQ (US100) gained 0.12% on Friday (+5.71% for the week). All three indices ended the week in the black.
Economists believe the Fed has kept rates "too low" for too long, and its attempts to catch up now could derail the recovery from last year's coronavirus pandemic.
The reporting season for the second quarter starts this week. Banks traditionally open the reporting season with their global view of economic activity. Analysts expect weaker reporting for the second quarter than for the first quarter. Also, strategists say the economic slowdown combined with weak corporate earnings could push the S&P 500 down at least another 10%, compounding the losses that have already sent the Benchmark Index down 18% since the beginning of the year. While the Fed has said it is confident of achieving a so-called "soft landing" by lowering inflation without disrupting the economy, some investors believe that the sharp drop in stocks this year indicates that some economic slowdown is already into asset prices.
Elon Musk filed a Form 13D/A announcing his intention to terminate his agreement to buy Twitter at $54.20 per share. The letter cites "material breach of several provisions" of the merger agreement and the potential for "material adverse effect". Musk expressed concern that Twitter was underreporting the number of spam or bot accounts on the platform and Twitter's decision to fire two members of management after the deal was completed.
Stock markets in Europe were mostly up on Friday. German DAX (DE30) gained 1.32% on Friday (+0.86% for the week), French CAC 40 (FR 40) gained 0.44% (+0.82% for the week), Spanish IBEX 35 (ES35) was 0.27% cheaper (-1.53% for the week), British FTSE 100 (UK100) was up by 0.10% (+0.38% for the week).
The weak euro and rising inflation are extremely worrisome before new data on consumer prices in European countries. Inflation in more than six Eurozone countries, including Spain, is already in double digits, and the core CPI is at its highest level in decades. Against high inflation, the region's economic indicators have started to deteriorate rapidly, so the ECB needs to act more decisively, or else the EUR/USD exchange rate will fall below 1.
Russia continues to wage war with Ukraine with no sign of compromise or negotiation, leaving the possibility of a protracted conflict that could keep inflationary pressures alive. And the resignation of British Prime Minister Boris Johnson opens the door to more uncertainty in the UK as the battle for his replacement begins.
Oil closed last week in the negative, despite recovering on Thursday and Friday. But analysts note that futures have seen a decrease in short positions and an increase in long positions. Crude oil markets are still under pressure right now because of concerns about aggressive rate hikes by the Federal Reserve and the impact it could have on the US economy and its energy demand. But US gasoline prices are holding above $4.50 a gallon, with no sign of a drop in demand.
Asian markets traded higher last week. Japan's Nikkei 225 (JP225) gained 1.65% over the week, Hong Kong's Hang Seng (HK50) gained 0.16% over the week, and Australia's S&P/ASX 200 (AU200) was up by 2.11% over the week.
Sri Lanka's president fled the country after a crowd of protesters stormed the presidential palace in Colombo. Thousands of protesters stormed the president's home and office, as well as the official residence of the prime minister, on Saturday, speaking out against their failure to address the devastating economic crisis. COVID-19 caused the first blow to the economy of Sri Lanka: tourism has plummeted, and economic indicators have begun to deteriorate rapidly. Rising national debt and high oil prices led to a ban on chemical fertilizer imports last year, damaging agriculture. Then the fuel crisis began, gasoline and gas became rationed, and people could not cook food, without mentioning of going to work, school, etc. The government asked people to work from home and closed schools to save fuel. Overall inflation in the country of 22 million people reached 54.6% last month, and the central bank warned that it could rise to 70% in the coming months. The parliament speaker said Sri Lanka's president will formally resign on July 13. The prime minister has also said he will resign to allow an all-party interim government to take power.
The Chinese regulator fined Alibaba and Tencent for violating disclosure rules. Under antitrust law, the maximum possible fine in each case is 500,000 yuan ($74,688).
At the end of the week, futures on palladium (+11.86%), natural gas (+5.88%), wheat (+5.59%), sugar (+5.42%), lumber (+4.82%), and corn (+2.5%) showed the biggest gains on the commodities market. Gasoline futures (-6.47%), Brent oil (-4.01%), orange juice (-3.99%), gold (-3.36%), WTI oil (-3.35%) and copper (-2.33%) showed the biggest drop.
S&P 500 (F) (US500) 3,899.38 −3.24 (−0.08%)
Dow Jones (US30) 31,338.15 −46.40 (−0.15%)
DAX (DE40) 13,015.23 +172.01 (+1.34%)
FTSE 100 (UK100) 7,196.24 +7.16 (+0.10%)
USD Index 106.90 −0.24 (−0.22%)
- – Japan BoJ Gov Kuroda Speaks, tentative;
- – UK BoE Gov Bailey Speaks at 17:15 (GMT+3);
- – US FOMC Member Williams Speaks at 21:00 (GMT+3).
by , 2022.07.11
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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