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Market Wrap
The days economic calendar was full of Tier 1 risk events as the market received Flash PMI data readings from the USA, UK, EU and Australia. Generally, the data was very positive with the exception of Germany’s Markit Manufacturing and Composite data points, with UK services PMI also missing expectations.
The IHS Markit US Manufacturing PMI printed a record of 61.5 for the month of May, beating analysts’ forecasts of 60. The Services PMI rose to a record high of 70.1, with comments from Markit saying “Growth would have been even stronger had it not been for businesses often being constrained by supply shortages and difficulties filling vacancies.”
When studying the port container statistics for the Port of Los Angeles, the supply chain shocks should be coming to an end as containers imported grow month on month.
The EU consumer confidence Flash data for May, shows things are still pretty bad in the Eurozone, but getting slightly better. Today’s reading came in at -5.1 v’s the expected -6.8 and beats the previous reading of -8.1 for April.
Covid-19 variants are going to be a real problem for the world for a long time, and there is talk of having to be vaccinated yearly. Soon it will be as common to get a Covid jab as it is for the vulnerable to get a flu jab. Fingers crossed they can come up with a combo. The European Commission hosted a Global Health summit where the IMF proposed a $50B budget to beat the coronavirus, while the US VP Harris put a spanner in the works saying the USA were not prepared to sign an international treaty just yet, saying “I know some are eager to work toward a pandemic treaty. While we understand the intent, the United States believes that we need to first strengthen our foundations. Thankfully, we have opportunities to come together to do just that. Today’s summit, and the Rome Declaration, are opportunities. […] So let us work together,”. The USA is committed to strengthening its foundations first with the G7, G20 and WHO.
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Today’s risk-off markets meant the EURUSD came off from the weeks highs to trade back towards the weeks lows as once again 1.2200 proved to be too much resistance, which also translated to the US dollar index getting its head above the $90 level once again.
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The price action in the Nasdaq today was a Gap & Trap, as the long inventory from overnight and good data out of the USA today, lead traders to buy into the first minutes of the US open, only to see the market get pulled from underneath them trapping those early traders long. The next logical level to the downside would be the 13200 to 13150 and back into the value area of Wednesday.
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US benchmark yields are down at the weeks lows but are still trading in the April range which saw the inflation fears pull the tech stocks lower. Today’s price action in Apple, Microsoft and Google was all negative at the London close with Tesla being the only company out of the largest companies to be trading just above the day’s opening price.
