BAD NEWS IS GOOD NEWS
Global equities advanced last week as a soft US jobs report led investors to revise down the likelihood of a US rate increase in September.
This week, NATO members will meet in Turkey to decide on defence and security spending. SpaceX joins the NASDAQ100 index and we get German inflation data on Thursday.
With US markets closed on Friday for Independence day, the US jobs report was brought forward by one day and showed that the economy had added just 57,000 jobs which was well below consensus estimates. Investors took an optimistic interpretation of the data and read it to imply that the Federal Reserve may be less likely to raise interest rates in the face of a weakening job market. Predictions for a September rate rise fell from 65% back to 50% on the news, the dollar weakened and gold prices rose. Equity markets rallied on the changed backdrop with the Dow Jones Industrial average and the STOXX 600 setting fresh record highs. The S&P500 and NASDAQ100 also closed up on the week but the headline numbers obscure continued divergence across sectors - traditional & defensive stocks advanced while AI related stocks continued to struggle for traction.
The S&P 500 finished last week up 1.7% (+9.3% YTD) whilst the STOXX 600 in Europe added 2.7% in the week, bringing gains to 10.2% YTD.
10 year bond yields rose last week, (bond yields rise as bond prices fall) on both sides of the Atlantic. Benchmark bond prices dropped as investors sought to reposition in light of the US jobs report. The 10-year US Treasury yield rose 12bps to settle at 4.49%. The German bund equivalent followed suit, rising 8bps to 2.94%.
- Mon 6th - Global PMI's
- Tue 7th - NATO conference begins in Ankara* SpaceX debuts on NASDAQ 100
- Wed 8th - Fed rate meeting minutes released
- Thu 1st - German CPI data
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.