Week in review
- Global equities continued to grind higher last week, helped by ongoing solid economic growth yet still benign long-term bond yields. In a further sign that U.S. inflation fears have likely peaked, Wall Street shrugged off a further surge in the ISM manufacturing price index to 92.1 in June – the highest level since 1979! And although Friday’s gain in U.S. payrolls was stronger than expected at 875k (market 700k), the market focused on signs of improved labour force participation and the potential for rising supply to ease labour shortages and potential wage pressures. The $US strengthened last week, which along with weaker iron-ore prices weighed on the $A. Oil prices rose following a (likely temporary) delay in OPEC’s anticipated decision to increase supply a little further.
- As expected, local economic data revealed ongoing strength in house prices and home lending, while Sydney’s lockdown dragged on. So far at least, local markets are ‘looking through’ the lockdowns, anticipating the hit to economic growth and corporate earnings will be modest and fleeting. We’ll see!
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