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Frankfurt – 01/06/2021
Even though the economic data is so positive at the moment, investors remain rather cautious. The promising figures could have a negative impact, especially on inflation and the potential reaction of the central banks.
As the week progresses, the markets look ahead to Friday’s US labor market report for May. Tomorrow the Fed’s economic report, the Beige Book, is expected. Above all, the stock market is worried whether the Federal Reserve might tighten the monetary reins again given the improving economic data. Leading Fed representatives had recently hinted at this.
US Markets at a glance
After a strong start, the US stock markets were unable to continue the upward trend. The Dow Jones was able to salvage a small gain of 0.13 per cent to 34,575.31 points at the close of trading. The NASDAQ Composite closed 0.09 per cent lighter at 13,736.48 points after starting 0.58 per cent higher at 13,829.06 points.
The Corona vaccination campaign is progressing rapidly in the USA. According to data released by the CDC on Sunday, more than half of the population has received at least one vaccination. As a result, investors appeared increasingly confident in an economic recovery. On the economic side, sentiment in the US industry continued to brighten, underlining investor optimism and reminding investors of concerns that the Federal Reserve might be forced to act on its previously loose monetary policy.
Meanwhile, on the corporate side, the quarterly reporting season was drawing to a close. In the pre-market, the Canadian cannabis company Canopy Growth presented its figures for the fourth quarter of its financial year and the whole year. After the close of Wall Street, the video conferencing service Zoom and the computer company Dell are expected to present their figures.
Far East Markets at a glance
Once again, there was no uniform picture on the Asian stock markets.
The Japanese benchmark index Nikkei finally fell by 0.16 per cent to 28,814.34 points, while things looked brighter in China. On the Chinese mainland, the Shanghai Composite rose 0.26 per cent to 3,624.71 index points, and the Hang Seng ended Tuesday’s trading 1.08 per cent higher at 29,468.00 points on Hong Kong’s stock exchange.
According to market observers, the reaction to China’s family policy change, which now allows married couples to have up to three children, is likely to be closely watched over the next few days. The relaxation of the measure is being made to counteract the rapidly ageing population and declining birth rate, which are being met by a sharp rise in the cost of living. The Caixin manufacturing purchasing managers’ index provided little impetus, showing little change from the previous month, as expected.
Market participants spoke of a wait-and-see attitude until further economic data such as retail sales from Hong Kong or the USA’s purchasing managers’ index are presented.
European Markets at a glance
The European stock markets presented themselves with a positive tendency in Tuesday trading.
The EuroSTOXX 50 opened slightly higher and was subsequently able to extend its gain by 0.8 per cent to 4,071.75 index units.
After numerous attempts, the DAX has managed to jump above its previous highs today. At its peak, it climbed to 15,685 points, the highest level ever. At the end of trading, it was still up 0.95 per cent at 15,567.36 points. The TecDAX also started trading with positive signs but fell back in the day and ended trading almost unchanged at 3,412.14 points.
According to market participants, the start of the new month of June brought fresh money to the stock markets. Support also came from the economic side: sentiment among industrial companies in the eurozone rose to a record high in May. So far, investors have not been disturbed by the strong increase in inflationary pressure associated with the growth.
Forex, gold, oil and crypto
Robust economic data from the eurozone supported the euro on the foreign exchange market today. At times, the common European currency marked a high for almost a week at 1.2254 US dollars, but then the momentum faded. The last price paid was 1.2228 dollars.
Because of the unchanged short-term strategy and a lack of signals for a further expansion of production, crude oil prices rose today. The price of North Sea oil climbed above the 70 US dollar per barrel mark for the first time since March. Most recently, 97 cents more than the previous day was paid for a barrel of Brent North Sea crude at 70.29 US dollars. West Texas Intermediate light oil rose by 1.49 dollars to 67.81 dollars.
The gold price had initially continued recent price gains on Tuesday and reached its highest level in five months. At times, the troy ounce traded for 1916.64 US dollars on the London Stock Exchange. In the end, however, the price fell back below the hard-fought $1.900 mark and stood at $1.898 at the end of trading in New York.
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The cryptocurrency market was relatively flat today, and most top tier digital assets did, however, remain under pressure. Bitcoin fluctuated between $35,800 and $37,500 and is currently sold for $36,300, or 4 per cent less than yesterday. Ethereum, XRP, Binance Coin, Cardano, Uniswap and co all dipped between 1 and 4 per cent, but overall, the upward recovery trend remains intact.
Corporate and world economic news
In China, the mood among small and medium-sized industrial enterprises remains good. The purchasing managers’ index published by the business magazine “Caixin” on Tuesday rose as expected to 52.0 points in May (April: 51.9). The government had already published its sentiment indicator for large and state-dominated industrial enterprises the previous day. This indicator fell by 0.1 points to 51.0. However, this indicator also points to further growth in the industry. In the first three months, the industrial sector grew by a quarter compared to the previous year. In April, the production growth weakened somewhat – but it still increased by 9.8 per cent.
The labor market in Germany developed much more favorably than expected in May in spring recovery. As the Federal Employment Agency (BA) announced, the unemployment rate adjusted for seasonal influences fell by 15,000 people compared to April. This means that 2.687 million people are now without employment. Economists had expected a decline of only 9,000 persons.
Growth in the German industry lost some momentum in May, primarily due to increasingly acute supply bottlenecks. The purchasing managers’ index surveyed by IHS Markit in this sector fell to 64.4 from 66.2 points. Economists had expected a reading of 64.0. The first release was for a reading of 64.0.
The industry in the eurozone is rushing from record to record. In May, the Purchasing Managers’ Index (PMI) for the sector rose to 63.1 points, according to a second release by the IHS Markit Institute. This is the highest value since the survey began in June 1997.
Activity in the US industry accelerated in May. The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index rose to 61.2 from 60.7 the previous month. Economists surveyed by Dow Jones Newswires had forecast a decline to 60.5.
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