The S&P 500 and NASDAQ both hit record highs as US stocks saw their best week since April. Energy stocks outperformed as the price of oil moved to a level last seen in 2018, whilst bond proxy sectors such as utilities and real estate lagged.
It was a quiet week for US economic releases with the focus mainly on the housing market. Both new and existing home sales fell in May, but in line with expectations. There is growing evidence that prices are starting to level off somewhat as demand wanes slightly. However, in the context of the current interest rate environment the US housing market remains robust.
It has been clear that the US has led the global post COVID-19 recovery, but there are encouraging signs that other areas of the developed world are beginning to catch up.
Within the eurozone, manufacturing PMIs for June remained above the 60 mark, consolidating the positivity seen from Mau’s record figure. The services PMI figure was also supportive, coming in at 58.0 – it’s highest figures since early 2018. The service sector has lagged somewhat, as the makeup of the eurozone economy and the intricacies of some restrictions left it more exposed throughout COVID-19.
Whilst we may be seeing a delay in easing restrictions in Ireland over the coming weeks, the general trend within the eurozone, is lower case numbers, rising vaccinations, and an easing of lockdown restrictions.
In the UK, the Bank of England left interest rates unchanged last week but did revise its GDP growth expectations for Q221 as the economic backdrop continues to improve. Both manufacturing and services PMIs fell slightly in the latest reading, but still both remain exceptionally at 64.2 and 61.7 respectively.
Global stocks were up last week by 1.1% in euro terms and 1.5% in local terms. Year-to-date global markets are up 16.0% in euro terms and 13.3% in local terms. The US market, the largest in the world, was up 1.1% in euro terms and 1.5% local terms.
Fixed Income & FX
The US 10-year yield finished at 1.52% last week, up from 1.43% a week earlier. The German equivalent finished at -0.16%. The Irish 10-year bond yield finished at 0.23%, to remain in positive territory. The Euro/US Dollar exchange rate finished at 1.19, whilst Euro/GBP finished at 0.86.
Oil finished the week at $74 per barrel and is up 56.4% year-to-date in euro terms. Gold finished the week at $1,784 per troy ounce and is down -3.8% year to-date in euro terms. Copper finished the week at $9,388 per tonne.
The week ahead
Wednesday 30th June
Flash eurozone inflation data is released.
Thursday 1st July
The latest US and Chinese manufacturing PMIs are published.
Friday 2nd July
US non-farm payrolls for June go to print.