Report by Renta 4
European markets openslightly higher (Eurostoxx 50 futures up 0.3%, S&P 500 up 0.1%, Nasdaq 100 up 0.4%),
On the geopolitical front, today the US and Iran will meet again in Doha (Qatar) following the renewed escalation and subsequent de-escalation over the weekend.
According to Trump, the meeting is taking place at Iran’s request, with the US focusing its stance on Iran’s denuclearisation. However, tensions remain high after the Iranian Deputy Foreign Minister declared his intention to impose unilateral traffic controls in the Strait of Hormuz – with Oman refusing to cooperate – a measure to which the United States and its allies are firmly opposed due to the risk that it could lead to the collection of tolls.
Maritime traffic continues in the Strait, but at a slower pace than last week. Brent crude has rebounded slightly to $73/b.
Also of significance for the Fed and its independence is the Supreme Court’s decision (5 to 4 votes) that Governor Lisa Cook should remain in her post despite Trump’s attempt to force her removal on allegations of mortgage fraud.
In corporate news, we highlight the announcement that SpaceX will join the Nasdaq 100 on 7 July. Nike is due to report its results in the US today. Overnight, the Korean Kospi index (up 2.9%) stood out, with gains for Samsung (up 5%) and SK Hynix.
In contrast, attention in Japan is focused on the extreme weakness of the yen, which has depreciated against the dollar to its lowest levels since 1986, thereby increasing pressure from imported inflation and keeping the market on high alert for a possible currency intervention.
On the macro front, in China we have seen the official PMIs for June, which show an economy operating at a slow pace: manufacturing at 50.2 (versus 50.1 estimated and 50 previously), services at 50.3 (versus 49.9 estimated and 50.1 previously) and the composite index at 50.6 (versus 50.5 previously).
In Europe, we will see preliminary June CPI figures for Germany (expected to remain stable at 2.6%) and France (expected to moderate to 2.0% estimated compared to 2.4% previously), following yesterday’s figures for Spain (where the headline CPI held steady at 3.2% against 3% estimated, whilst core inflation moderated slightly to 2.9% against 3%e and the previous reading).
Price levels remain above target (2%) despite the moderation in energy prices in June, and this could justify a further rate rise of 25 bp by the ECB (the market is pricing this in for the end of the year).
In the United States, attention today will be on the Conference Board’s consumer confidence index, which could improve in June following the provisional peace agreement in the Middle East, and we will have the first employment data of the week, with the JOLTs job openings survey expected to show a moderation, ahead of tomorrow’s ADP private employment report and Thursday’s official employment report.
