The State of Markets
A brief review of all key upcoming events across the major regions of the globe & an overview of key recent market trends.
The State of Markets:
Politics came back into sharp focus in markets last week. Last weekend’s poor European election result and calling of a snap French election created significant uncertainty. That drove a ‘risk off’ trade (in the Eurozone), as that uncertainty was priced in. Nation state government bond spreads over German bunds widened notably (in France, for example, spreads widened to 78bps from 49bps) while European equities sold off. The French CAC40 was 6.2% lower on the week; the Italian MIB was down 5.6%, while Germany’s DAX was 3% lower. On the latest polling Macron’s centrist camp was behind both the far right ‘Le Pen’ grouping (known as RN) and the far left ‘Popular Front’ coalition.
In the US, in contrast, equity markets made new highs propelled by better-than-expected US inflation data (and despite a slightly hawkish tilt at the Fed meeting). Leadership was narrow (once again) and came primarily from the mega cap tech area of the market. Nvidia, after a stock split, closed the week 9% higher (& is now again notably overextended to the upside - see chart); Apple was also a strong performer (up 8% after the developers’ conference and associated announcements); while Broadcom (a competitor to Nvidia in AI chips) closed the week +23% (after good earnings on Wednesday). Illustrating the narrowness of the advance, 7 of the 11 top level S&P500 sectors closed down on the week (while IT was +6.4%).
The focus this coming week will remain on the price action in EZ bond spreads. Key macro data themes that will be in focus include: i) various US housing data which is released throughout the week; ii) it’s also a key week for Chinese macro data (especially on Monday); while iii) three key central banks have monetary policy meetings this week (RBA, BoE & PBoC). See below for a summary of key events.
Fig A: Nvidia ‘over-extendedness indicator’ vs Nvidia share price ($ per share)
(All in London time BST)
Events: N/A
Data: Chinese new & used home prices (May, 2:30am); Chinese data (May, 3am); US Empire manufacturing (Jun, 1:30pm).
Earnings: N/A
Events: RBA policy decision (5:30am).
Data: US retail sales (May, 1:30pm).
Earnings: N/A
Events: US bank holiday.
Data: UK headline & core CPI (May, 7am); US NAHB homebuilders index (Jun, 3pm).
Earnings: N/A
Events: PBoC policy decision (2:15am); Bank of England policy decision (12pm).
Data: US housing starts & building permits (May, 1:30pm); Eurozone consumer confidence (June first estimate, 3pm).
Earnings: Accenture.
Events:
Data: Manufacturing & service sector PMIs for Japan (1:30am), France (8:15am), Germany (8:30am), Eurozone (9am), UK (9:30am) & US (2:45pm) – all June first estimates; US Conference Board leading index (May, 3pm); US existing home sales (May, 3pm).
Earnings:
Longview on Friday, 14th June 2024
“XXX”
Events: Speech by the Fed’s Harker on the economic outlook (Mon, 6pm).
Data: Canadian housing starts (May, 1:15pm); US Empire manufacturing (Jun, 1:30pm); Canadian existing home sales (May, 2pm).
Earnings: Lennar
Events: The Fed’s Cook gives acceptance remarks (2am), speeches by the Fed’s Barkin on the US economy (3pm), Collins gives keynote address (4:40pm), Logan in Q&A (6pm), Kugler & Musalem on the economy and monetary policy (6pm & 6:20pm) & Goolsbee in panel discussion (Tues, 7pm).
Data: US New York Fed services business activity (Jun, 1:30pm); US retail sales (May, 1:30pm); US industrial & manufacturing production & capacity utilisation (May, 2:15pm); US business inventories (Apr, 3pm); US total net TIC flows (Apr, 9pm).
Earnings: N/A
Events: US bank holiday
Data: US NAHB homebuilders index (Jun, 3pm).
Earnings: N/A
Events: Speech by the Fed’s Barkin on the economic outlook (9pm)
Data: US current account balance (Q1, 1:30pm); US weekly jobless claims (1:30pm); US housing starts & building permits (May, 1:30pm); US Philadelphia Fed business outlook (Jun, 1:30pm).
Earnings: Accenture, Kroger.
Events: N/A
Data: Canadian retail sales (Apr, 1:30pm); US S&P manufacturing & service sector PMIs (June first estimates, 2:45pm); US Conference Board leading index (May, 3pm); US existing home sales (May, 3pm).
Earnings: N/A
Events: Speeches by the ECB’s Lane at Reuters event (9am), Lagarde at the company Pasqal (10am) & Guindos in Spain (12:30pm).
Data: Italian core CPI (May, 9am); Eurozone labour costs (Q1 final estimate, 10am).
Earnings: N/A
Events: Knot in Dutch Parliament (10am), Cipollone & Guindos at European Financial Integration 2024 conference (1pm & 2:30pm), Villeroy in Paris (5pm).
Data: German & Eurozone ZEW survey – expectations & current situation (Jun, 10am); Eurozone headline & core CPI (May final estimate, 10am).
Earnings: N/A
Events: Centeno in Lisbon (9:30am).
Data: ECB current account (Apr, 9am); Eurozone construction output (Apr, 10am).
Earnings: N/A
Events: Eurogroup in Luxembourg.
Data: German PPI (May, 7am); Eurozone new car sales (May, 7am); Eurozone consumer confidence (June first estimate, 3pm).
Earnings: N/A
Events: Nagel at G-30 spring plenary meeting (Fri, 8am); Eurogroup in Luxembourg.
Data: French INSEE business & manufacturing confidence (Jun, 7:45am); HCOB manufacturing & service sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all June first estimates.
Earnings: N/A
Events: N/A
Data: Rightmove house prices (Jun, 12:01am).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: Headline & core CPI, RPI & PPI (May, 7am); Land Registry house prices (Apr, 9:30am)
Earnings: N/A
Events: Bank of England policy decision & MPC minutes (12pm).
Data: N/A
Earnings: N/A
Events: N/A
Data: GfK consumer confidence (Jun, 12:01am); retail sales (May, 7am); public sector finances (May, 7am); S&P manufacturing & service sector PMIs (June first estimates, 9:30am).
Earnings: N/A
Events: Chinese 1-year MLF announcement.
Data: Japanese machinery orders (Apr, 12:50am); Australian consumer confidence (Jun, 2:30am) & ANZ job ads (May, 2:30am); Chinese new & used home prices (May, 2:30am); Chinese data (IP, retail sales, FAI & unemployment rate for May – all at 3am).
Earnings: N/A
Events: RBA policy decision (5:30am)
Data: N/A
Earnings: N/A
Events: BOJ minutes from April meeting (12:50am)
Data: Japanese imports, exports & trade balance (May, 12:50am).
Earnings: N/A
Events: PBoC policy decision.
Data: N/A
Earnings: N/A
Events: N/A
Data: Australian Judo Bank manufacturing & service sector PMIs (June for estimate, 12am); Japanese headline & core CPI (May, 12:30am); Japanese Jibun Bank manufacturing & service sector PMIs (June first estimate, 1:30am).
Earnings: N/A
Longview on Friday, 14th June 2024;
“Brewing Shift in the Shape of Global Growth”
Quarterly Asset Allocation No. 58, 12th June 2024:
“China: ‘Pushing on a String’”
Longview on Friday, 7th June 2024:
“Small - Not So Beautiful (Yet)…”
Tactical Equity Asset Allocation No. 245, 6th June 2024:
“Upward Momentum Expected to Continue (for now)”
Quarterly Asset Allocation No. 58, 4th June 2024:
“Eurozone: Above Trend Growth Ahead”