TOO MANY JOBS
Global equities reversed last week as a stronger-than-expected US jobs report raised rate hike expectations prompting a sell-off on tech stocks. Asian and European markets opened in the red on Monday morning as selling pressures continue.
Over the weekend, tensions in the Middle East rose as Iran and Israel exchanged fire despite President Trump's demands for calm. The ECB holds a rate meeting on Thursday (0.25% increase expected), SpaceX debuts on the NASDAQ on Friday and the US reports on Consumer Price Inflation.
Market headlines were dominated by a sell-off in tech stocks last week. The catalyst was strong US employment data which showed that 172,000 jobs had been added to the economy in May (versus 80,000 expected) while unemployment remained low at 4.3%. The strength of the report when added to existing inflation concerns, raised market fears that the Federal Reserve will look to increase interest rates. The recent surge in borrowing by tech firms seeking to build out AI infrastructure may leave earnings vulnerable to higher interest rates prompting investors to exit positions in the sector. The S&P 500 logged a negative week after 9 straight positives while the NASDAQ dropped 4% on Friday alone. Asian and European markets opened in the red on Monday as selling pressures continued. Over the weekend, tensions in the Middle East rose as Iran and Israel exchanged fire in the face of President Trump's demands for calm. With growing concern over dwindling global oil reserves and no sign of a deal in sight, investors will be closely monitoring the situation.
The ECB hold a rate meeting on Thursday where they are expected to increase rates by 0.25%, elsewhere we get US Consumer Price Inflation data and SpaceX shares will debut on the NASDAQ on Friday with Elon Musk targeting retail investors as he eyes a $1.75tn valuation.
The S&P 500 finished last week down 2.59% (7.86% YTD) whilst the STOXX 600 in Europe dropped 0.53% in the week, bringing gains to 5.15 YTD.
10 year bond yields rose last week, (bond yields rise as bond prices fall) on both sides of the Atlantic. Benchmark bonds sold off as investors priced in higher-for-longer rates in the face of that strong US employment data. The 10-year US Treasury yield rose 13bps to settle at 4.57%. The German bund equivalent followed suit, rising by 10bps to 3.04%.
- Mon 8th- US Conference Board Employment Index * Japan Q1 GDP
- Tue 9th - Germany April production index
- Wed 10th - US May Consumer Price Index inflation data
- Thu 11th - ECB interest rate decision * US Producer Price Inflation data
- Fri 12th - SpaceX shares debut on NASDAQ
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.