Weekly Market Review - July 8-12
The world is still trying to figure out whether the Sino-US trade tensions cooled for real. The US might be forced to cut interest rates by the end of this month, which puts additional pressure on the American currency. The USD has been the worst performer of the week, losing 0.2% against the euro and the British pound.
On the other side, the New Zealand dollar increased against all major currencies.
In the cryptocurrency market, Bitcoin is trading at around $11,400, departing from the weekly high at over $13,000. Most of the major altcoins are in red for the week, with EOS losing over 17%.
US PPI Shows Sluggish Growth
US producer price index (PPI) increased in June only by 0.1%, as the cost of energy and other goods fell for the second month in a row. Also, the Labor Department said on Friday that the growth in core PPI slowed in June, suggesting that inflation might continue to demonstrate a moderate increase despite significant price gains in several goods and services. Year-on-year, the PPI expanded by 1.7% in June, which is the weakest performance since January 2017. Analysts expected the PPI to remain unchanged from May and grow by 1.6% in annual terms.
Eurozone Industrial Output Expands
Industrial production in the eurozone increased above expectations in May. On Friday, Eurostat said that factory production in the 19 countries sharing the euro expanded by 0.9% in May compared to April. Analysts expected a 0.2% growth. April data was revised upward to show a 0.4% decline in factory output, compared to the initially reported decline by 0.5%. The May performance was driven by a boost in the production of non-durable consumer goods, including clothes and packaged goods, which rose 2.7%.
German Inflation For June Was Revised up
Germany’s harmonised index of consumer prices (HICP) accelerated to 1.5% in June year-on-year, staying below the inflation target of the European Central Bank (ECB). On Thursday, the country’s Federal Statistics Office said that inflation data, which is harmonised to make it easy to compare with CPI data from other EU countries, was revised up from the preliminary reading pointing to a CPI growth of 1.3%. In monthly terms, German HICP increased by 0.3% in June, up from initial estimates at 0.1%.
Eurozone Unemployment Drops to Record Low
Unemployment in the eurozone declined to the lowest level in 11 years in May. Eurostat said that the jobless rate across the 28 countries of the European Union (EU) fell to 6.3% from April’s 6.4%. In the 19 states of the eurozone, the rate fell to record low at 7.5% compared to 7.6% in April. However, there are serious discrepancies from region to region. Thus, Germany’s unemployment rate is at 3.1% while Greece struggles with a figure above 18%.
German Exports Jump Above Expectations
German exports increased above expectations in May. However, they couldn’t offset the decline recorded in April. On Monday, the Federal Statistics Office said that exports increased by 1.1% in May, beating analysts’ forecasts that pointed to a 0.5% rise. In April, the indicator tumbled by 3.4%. Imports in Europe’s largest economy fell 0.5% in May. Thus, Germany saw its trade balance expanding to 18.7 billion euro from 16.9 billion reported in April.
Singaporean GDP Surprisingly Slows
Singapore’s economy unexpectedly fell in the second quarter, sending worrying signals on the global economy. The city-state’s GDP tumbled at an annualised 3.4% on the quarter, which is the largest drop since 2012. Analysts surveyed by Bloomberg expected expansion by 0.5% after 3.8% growth reported in the first quarter. Singapore is heavily reliant on exports and foreign trade, which have been severely affected by the trade tensions between the US and China. Year-on-year, the GDP fell 0.1% in the second quarter.
Upcoming News to Watch
On Monday, markets in Japan will be closed for the national holiday called the Marine Day.
The eurozone and several of the European countries will release multiple economic updates. Thus, on Tuesday, the eurozone will report its economic sentiment index and the trade balance for May. On Wednesday, the region will know the inflation changes for June. Elsewhere, the UK will also publish its inflation data during the same day.
On Tuesday, the US will present data on the trade balance, exports, and imports. The markets will also closely watch several speeches performed by Fed officials, including Charles Evans, James Bullard, Eric S. Rosengren, and Raphael Bostic.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.