Eyes on producer prices in the Eurozone and the US ISM index. In China, the index of services is growing
3′ of reading
The European stock exchanges are moving towards a slow start to the session and the week, with their eyes focused on the testimony of Christine Lagarde to the Economic and Monetary Affairs Committee of the European Parliament, from which important indications on the next steps of the ECB could emerge. Meanwhile, awaiting new macro data (those on the services sector are coming soon), the markets of the Old Continent will try to follow in Asia, where the rally that has now lasted for three sessions continues, thanks to the rise in the Chinese PMI index (to 57.1 from 56.4 points in April, with an increase in supply and demand).
Milan, which had closed the previous eighth with a +1.3% against a contrasted Europe, is heading towards a modest upturn (+0.15% for Ftse Mib futures). The expected start to Frankfurt (+0.04%) was slow (+0.04%), after the data on the trade balance (+1.2% on the month for exports, -1.7% for imports and a surplus of 18.4 billion euros ). The opening of Madrid’s Ibex 35 (+0.12% futures), Amsterdam’s Aex (-0.03%) and London’s Ftse 100 (+0.1%) is expected to be quiet. Oil rose (+1.3% to 72.67 dollars a barrel for WTI expiring in July and +1.2% to 77.04 dollars for Brent in August) after Saudi Arabia, during the OPEC+ meeting at the weekend said it was ready to cut production by a further million barrels a day, with the aim of “doing whatever is necessary to stabilize the market”. On the currency side, the euro returned below 1.07 dollars and changed hands to 1.069 (from 1.076 on Friday). The euro/yen is at 149.984 and the dollar/yen at 140.26. Gas goes up by 6% to 25.2 euros while Ukraine’s counter-offensive against Russia is ready to start.
Tokyo at the highest for 33 years
The Tokyo Stock Exchange closed the first session of the week at a 33-year high, after the strong acceleration of the US stock indexes following the agreement on the debt ceiling in Washington and encouraging data from the labor market. The Nikkei marks an increase of 2.20% to 32,217.43, adding 693 points. On the foreign exchange market, the yen once again lost ground against the dollar, at 140.20, and against the euro, slightly below 150. Again in Asia, Hong Kong opened the session in positive territory: the Hang Seng index scored early an increase of 0.34%, to 19,014.96 points. A slightly different picture in the Chinese markets, which open the session with little movement and contrast, around parity: the Shanghai Composite index rises by 0.05% in the early stages, to 3,231.81 points, while that of Shenzhen drops by 0.04 %, at a share of 2,034.89.
China, services are growing. Imports to Germany drop
As for the first economic data of the day, the pace of growth of the Chinese services activity is picking up. In May, the index rose to 57.1 from 56.4 points in April, according to Caixin Media and S&P Global. The 50 dimension separates expansion from contraction. Both supply and demand for services increased further in May, with indicators for business activity and total new orders both remaining above 50 for the fifth consecutive month and posting the second-highest reading since November 2020. said Caixin. The export new orders sub-index also remained in expansionary territory for the fifth consecutive month. Employment in the services sector rose marginally, with the employment indicator topping 50 points for the fourth consecutive month, as service firms ramped up hiring to boost production capacity, Caixin said.
Last April, the German trade balance surplus amounted to 18.4 billion euros. Imports fell 1.7% month on month while exports rose 1.2%, reversing estimates that indicated a 2.8 percent decline.
After a roaring week for European stocks, with Thursday and Friday up sharply, investors today are faced with some macroeconomic indicators that could also change the mood. For example, the production prices of the Eurozone in April, a non-secondary indicator for understanding the ECB’s next moves. Or the US non-manufacturing ISM index, which could give new signals on the health of the US economy. While awaiting these indicators, the European Stock Exchanges are preparing to open upwards/downwards. This is after Asian stocks closed in…
Today’s events
As mentioned, many indicators are arriving today. After the Chinese PMI index, the services PMI arrives in Italy. The PMI index of purchasing managers is a significant prospective indicator for understanding how the economy will perform in the coming weeks. Then come April producer prices from the Eurozone, April industrial orders from the United States, durable goods orders and May’s composite non-manufacturing ISM index.
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