Global stocks rally on strong US Employment report

Macroeconomic/ geopolitical developments

• The standout event in the week was Friday’s strong US Employment report, with 943K jobs added in June, notably above consensus estimates.
• Thursday saw the Bank of England Meeting and a slightly more hawkish tone stating that “some modest tightening of monetary policy over the forecast period is likely to be necessary”.
• Global PMI data earlier in the week was mixed, but with a notable beat for the US ISM Services PMI data.
• Slightly hawkish comments from Richard Clarida (Federal Reserve Vice Chair) and Christopher Waller (Federal Reserve Governor) added modest upward pressure on yields earlier in the week.
• The continuing spread globally of the COVID-19 Delta variant keeps markets vulnerable to intermittent, “risk off” moves.

Global financial market developments

• Global stock averages marked time for much of last week but stayed firm before rallying Friday after the strong US Employment report.
• Global bond markets reversed some of the recent move to lower yields, after the strong US Employment report, with anticipation of possibly a move towards a more hawkish tone from the Fed and other major Central Banks.
• The higher US yields saw a broad US Dollar rally Friday and the US Dollar Index rebounded.
• EURUSD sold off Friday, submitting modest gains from early August, as the underlying bias remains negative.
• GBPUSD retreated slightly for a short time after the Bank of England on Thursday and further on Friday with wider US Dollar gains after the strong US Employment report.
• Gold saw a significant sell off Friday in thew wake of the broad US Dollar rally.
• The Oil price lost ground through the week and takes a negative bias into mid-August.
• Copper has sold off in early August and is aiming lower into this week.

Key this week

• Geopolitics:
  • Monitoring the global spread of the COVID-19 Delta variant.
  • Watching for further global lockdown easings.
• Central Bank Watch:  We get the Reserve Bank of Australia (RBA) meeting minutes on Tuesday and the Reserve Bank of New Zealand (RBNZ) interest rate decision and statement is on Wednesday.
• Macroeconomic data: Data standouts this week are the global inflation reports through the week from the UK, EU, Canada and Japan, plus Retail Sales reports from China, the UK and US.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued