by Chiara Di Cristofaro and Paolo Paronetto
The market is waiting to see the reaction of US indices to the debt agreement, which must be approved by Congress by June 5th. The Nikkei index closed slightly higher led by electronics stocks. Focus on European inflation arriving tomorrow and on the US labor market
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(Il Sole 24 Ore Radiocor) – The session for the starts under the banner of uncertainty European stock exchangeswho will be watching the reopening of Wall Street after the closure on the eve to observe the reaction of the US market to thedebt agreement, which must be approved by Congress by June 5 to avoid default. The optimism linked to the agreement between Democrats and Republicans is relative, given that the agreement is the result of a difficult compromise, and we look at the path that the measure will take between now and June 5 with some doubts. In addition, expectations on the interest rateswho now consider a new hike (by 25 basis points) probable at 61.9% at the FOMC meeting in June.
On the currency, the prospect of a new tightening of the Fed monetary policy supports the dollar: the euro fell below 1.07 and is indicated at 1.0688 from 1.0723 yesterday. The greenback is also worth 140.89 yen (from 140.64), while the euro/yen is at 150.60 (150.80). Oil prices are down: the July future on WTI drops 0.86% to 72.33 dollars a barrel, while the same delivery on Brent slips by 0.75% to 76.49 dollars. Down 0.3% to 24.9 euros per megawatt hour in July natural gas futures in Amsterdam.
Tokyo closes cautiously higher
Closing slightly higher for the Tokyo Stock Exchange. The major Nikkei index closed gaining 0.3% to 31,328.16 points led by electronics, pharmaceutical and automotive stocks. In the morning the index had opened hesitantly, then dropped by about 0.3% deprived of the usual compass represented by the financial center of Wall Street, closed the day before for holidays. In conclusion, optimism prevailed, continuing the upward trend that has lasted for three sessions in Tokyo. Among stocks, Daiichi Sankyo finished up 1.2%, Mitsubishi Chemical Group finished down 3% and MS&AD Insurance Group Holdings fell 0.9 percent. The broader market Topix index fell 0.1% to 2158.29 points.
Unemployment down in Japan
As regards macroeconomic data, the unemployment rate in Japan dropped to 2.6% in April, as communicated today by the Japanese Interior Ministry. This is the first drop in three months, as well as a decrease compared to the previous month – when unemployment was at 2.8% – and compared to the forecasts of analysts, who had estimated a 2.7%.
Wall Street at the starting gate
The American stock market restarts after the Monday holiday for Memorial Day and the agreement on Saturday night to move the US public debt ceiling for another two years, still to be voted on in Congress. The assent by June 1st is essential to avoid the closure of the US state machineae had, therefore, recently raised concerns about the financial parterres.
Even overseas, however, attention has shifted to Friday, when an important indicator will be released to understand whether or not the Federal Reserve will continue or adjust the cost of money: the number of new US employees. The bond market is probably pricing a break, which however is undermined by the resilience of the stars and stripes economy.
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Clare Di Cristofaro
Radiocor editor
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Paolo Paronetto
Radiocor editor
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