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Archinomics Weekly - Tuesday 1st June 2021

15 days ago

the
MARKETS

Equities

US markets maintained a positive trend, despite low volumes, with outperformance from the Nasdaq and small-cap Russell 2000 indices. In Europe, the DAX 30, CAC 40 and Euro Stoxx 50 all hit record highs, as markets closed a fourth successive month of gains. Japanese markets rose, as the vaccine rollout programme was accelerated, while China’s main indices posted the best performance for three months.

Bonds

US government bond markets were stable, reassured by the Federal Reserve’s reinforcement of its patient stance. Germany’s 10 year Bund rallied on dovish comments from the European Central Bank. Corporate bond markets were steady, as new issues in the high yield markets were met with reasonable appetite.

Currencies

The US dollar index languished at lows for the year, although the dollar made ground against the yen, which fell across the board. Sterling rose against all majors, while the euro was stronger against the dollar and the yen.

Commodities

Commodity markets were generally firmer, boosted by rising demand across the globe. The oil price moved back towards $70, while industrial metals outperformed other commodities.

Responsible investing

A Dutch court ruled that oil giant Shell should cut emissions by 45% by 2030, in line with Paris Agreement targets. This sets a precedent for responsibility at the corporate and not just at the national level.

MACROECONOMIC
UPDATE

President Biden launched plans for a $6 trillion budget, to include large-scale infrastructure programmes.


Federal Reserve governor Quarles suggested that talking about tapering the Fed’s bond buying programme is a matter of ‘risk management’.


China’s industrial profits rose 57% from the pandemic-hit levels of last year, although cost pressures from higher commodity prices are being felt in downstream sectors.

on the
RADAR

The US May non-farm payrolls are expected to see an increase of 660,000, against last month’s rise of closer to 250,000. The unemployment rate is forecast to fall to 5.9% versus 6.1% the previous month.


PMI data from across the globe are likely to be positive, with Services continuing to catch up with advances in the Manufacturing sector.

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