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US Market Highlights
US stocks closed higher on Monday despite Treasury yields hitting multi-week highs. The Dow Jones Industrial Average increased by 0.13% to 39,169.52, the S&P 500 rose by 0.27% to 5,475.09, and the Nasdaq Composite jumped by 0.83% to 17,879.30. The “Magnificent Seven” tech stocks all saw gains.
Asian Market Reactions
Asian markets displayed varied performances on Tuesday. Japan’s Nikkei N225 rose by 0.6% due to rising domestic bond yields, and Hong Kong’s Hang Seng increased by 0.3% with stronger property shares. In contrast, China’s CSI300 remained flat, Taiwan’s TWII fell by 0.8%, and South Korea’s Kospi KS11 dropped by 0.6%.
The US dollar hovered near a nearly 38-year high against the yen, trading at 161.56 yen, close to Monday’s high of 161.72 yen. This strength was supported by rising Treasury yields and speculation about the potential impact of a second Donald Trump presidency.
European Market Movements
In Europe, EURO STOXX 50 futures declined by 0.24%. The FTSE 100 stayed nearly flat on Monday, gaining just 0.03%, but futures indicated a 0.25% drop to 8,193.0 points for Tuesday. The euro held steady against the dollar, slipping by 0.07% to $1.0733 after reaching $1.0776 on Monday, its highest since mid-June.
Commodities Update
Crude oil prices continued their upward trend following Monday’s gains. Brent futures added 0.21% to $86.78 per barrel, while US West Texas Intermediate (WTI) crude rose 0.13% to $83.49. Spot gold remained steady at $2,332.27 per ounce, and US gold futures climbed 0.2% to $2,342.70.
Focus on Economic Reports and Elections
Investors are keenly watching upcoming US economic reports, including the Department of Labor’s JOLTS labor market report for May and the June Nonfarm payrolls report. Additionally, Wall Street is anticipating several key reports this week, such as the Federal Reserve minutes, employment data, the final S&P US manufacturing PMI, and trade deficit figures.
UK Retail Inflation Eases
The British Retail Consortium reported that shop price inflation in the UK hit its lowest level since October 2021. Annual shop price inflation fell to 0.2% in June from 0.6% in May. Non-food item prices decreased by 1.0%, influenced by promotions on TV sets coinciding with the Euro 2024 soccer tournament. Food inflation continued its downward trend for the 14th consecutive month, slowing to 2.5% from 3.2%.
ECB’s Cautious Approach on Rate Cuts
European Central Bank President Christine Lagarde stated on Monday that the ECB needs more time to ensure inflation is moving towards the 2% target before considering further rate cuts. She emphasized the strength of the labour market, indicating the ECB can afford to wait for more data before making decisions.
Revolut Reports Record Profit
British fintech firm Revolut reported a pre-tax profit of £438 million in 2023, driven by strong user growth and diverse revenue streams, marking a significant turnaround from a pre-tax loss of £25.4 million the previous year. Revenues reached £1.8 billion, exceeding forecasts. Revolut aims for a valuation exceeding $40 billion through a $500 million share sale, potentially making it Europe’s most valuable startup.
Election Watch in France and the UK
On Tuesday, France will be a major focus as candidates decide whether to run in the second round of elections on July 7. ECB Vice-President Luis De Guindos and President Christine Lagarde are scheduled to speak, and the euro area’s preliminary consumer price data for June will be released. In the UK, voters head to the polls on Thursday with forecasts indicating tough prospects for the ruling Conservative party.
