Global market review
- U.S. stocks ended the week down after touching record highs earlier in the week, with some apparent concern on Friday that July U.S. consumer sentiment weakened on the back of a lift in inflation fears. Of course, that did not stop U.S. retail sales powering ahead in June as also reported on Friday. Earlier in the week, the market brushed off another higher than expected consumer inflation report, and for the same reason – namely much of the increase was concentrated in a few areas like used car prices, airfares and hotels. Further soothing market nerves was Fed chair Powell, who again reiterated that he’s in no hurry to tighten policy.
- Across global markets, oil edged lower while gold strengthened. Long-term bond yields eased further while the $US firmed.
- There’s little key global data for the week ahead, with U.S. manufacturing indices likely to remain firm when reported on Friday. That will leave markets to ponder further progress in the Q2 earnings reporting season – which at this very early stage (8% of S&P 500 companies have reported) is shaping up well, with major banks beating expectations last week.
- Markets will also be keeping a wary eye on the spreading delta COVID wave. Given high vaccination rates in the U.S. and Europe, however, what’s key is not the case count per se, but the extent to which we see a spike in hospitalisations and deaths, which could increase the risk of tighter U.S. restrictions.
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