Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
In yesterday’s session, investor sentiment was soured by data showing the resilience of the US economy and its labour market. Private surveys showed that US companies added the most jobs in over a year in June, and the services sector expanded faster than expected, which investors fear will allow the Fed to continue raising rates.
The minutes of the Fed's June meeting showed that the decision to hold interest rates steady in June was not unanimous, and that most officials expected further rate hikes would be necessary, as the dot plot had shown. Also yesterday, US factory orders data for May came in below expectations, but still showed growth.
Trading in global markets was subdued on Tuesday as US markets were closed due to a domestic holiday and there was little in the way of data releases to guide investors. The most notable of these was German exports, which fell -0.1% m/m in May, missing analysts’ expectations of a 0.3% rise.
Investors started the week trading cautiously. Weak manufacturing sector surveys pointed to a cooling yet resilient economy but were not enough to completely dampen investors’ risk appetite.
Investors ended the week on a brighter note than on Thursday. Market sentiment was boosted by encouraging data on inflation dynamics in the US and in the eurozone (despite a modest tick up in core inflation).
Investors continued to err on the side of caution, taking on board yet another round of hawkish signals from central bankers and incoming data pointing to lingering inflationary pressures and a strong US economy.
The outlook for monetary policy and inflation remained the key themes during a session with mixed results. On the one hand, risk appetite was lifted by a softer-than-expected inflation print in Italy (the headline HICP eased from 8.0% y/y in May to 6.7% in June). On the other, sentiment was spurred by hawkish signals from central bankers in Sintra.
Investors' risk appetite increased on Tuesday as some upbeat economic data in the US (where new-home sales rose at the fastest pace in over a year in May and consumer confidence rose to its highest level since early 2022 in June) balanced out a fresh round of hawkish comments from several central bank officials.
Fears of a global economic slowdown continued to weigh on investor sentiment at the start of the week, following a new batch of disappointing economic survey data and concerns about recent geopolitical developments in Russia.
Investors closed the week with yet another risk-off session, as recession fears returned to the fore following weaker-than-expected economic survey data across advanced economies.
The hawkish stance of central banks in advanced economies continued to center the stage in yesterday’s session. On the one hand, the Bank of England surprised with a 50 bp hike (25bp were expected by the consensus) to set the official interest rate at 5%, the highest level since 2008.
Yesterday’s session was marked by speeches from several central bankers. In the US, Fed Chairman Jerome Powell noted in his speech to Congress that he would not characterize last week’s decision as a pause, noting that additional 50 bp rate increases are a good guess of where monetary policy is headed, in line with the updated Dot-Plot.