SHANGHAI, Jun 30 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.
The US dollar rose to a one-week peak on Tuesday, posting its largest single daily gain in roughly two weeks, as new coronavirus outbreaks threatened to derail a global economic recovery, with the Australian and New Zealand dollars leading losses.
A decline in risk appetite benefits the US dollar as a safe haven.
Fears over the spread of the highly infectious Delta variant of the virus are denting sentiment at a time markets are on edge after the Federal Reserve shocked traders with a hawkish tilt earlier this month.
Indonesia is grappling with record high cases, while Malaysia is set to extend a lockdown and Thailand has announced new restrictions. Spain and Portugal are imposing travel restrictions on unvaccinated British travelers, even as some states in Australia tightened movement curbs.
“Generally it’s about increasing concerns over the Delta variant and it’s just hurting the market somewhat,” said Amo Sahota, director at corporate FX advisory firm Klarity FX in San Francisco.
“The market got its head turned with the severity of the some of the lockdowns in places such as Australia,” he added.
On Wall Street, US stock futures were little changed on Tuesday night as the market gets set to close out a winning first half of 2021 and second quarter.
Futures on the Dow Jones Industrial Average gained 20 points, or 0.06%. Futures on the S&P 500 rose 0.08%. Futures on the Nasdaq-100 added 0.11%.
Wednesday is the last day of the second quarter and final day of the first half of 2021. So far on the year, the S&P 500 is up 14%, while the Nasdaq Composite and the Dow are up 12% apiece. For the quarter, the S&P 500 is up 8%. The S&P 500 and Nasdaq all posted fresh record closes on Tuesday.
Investors have shrugged off high inflation readings and have kept buying stocks on the hopes an economic comeback from the pandemic would continue. The three biggest winners in the Dow this year so far are Goldman Sachs, American Express and Walgreens Boots Alliance, all up more than 30%. Chevron, Microsoft and JPMorgan Chase are up more than 20% each.
Good first halves usually bode well for the rest of the year. Whenever there has been a double-digit gain in the first half, the Dow and S&P 500 have never ended that year with an annual decline, according to Refinitiv data going back to 1950.
Oil prices reversed earlier losses to stand slightly higher on Tuesday as broad hopes for a demand recovery persisted despite new outbreaks of the highly contagious Delta variant of the coronavirus prompting fresh mobility curbs worldwide.
Brent crude futures were 37 cents, or 0.5%, higher at $75.05 a barrel, after slumping 2% on Monday.
US West Texas Intermediate (WTI) crude futures rose 40 cents, or 0.6%, to $73.31 a barrel, following a 1.5% loss on Monday.
“From a global perspective, there are seemingly growing concerns over the increase in the COVID-19 Delta variant,” StoneX analyst Kevin Solomon said.
“The market has grown relatively immune to COVID-19 developments, but if lockdowns occur in larger demand centres in Asia, we may see the market's nonchalance abate.”
Gold slipped on Tuesday to its lowest since mid-April as the dollar strengthened in the run-up to this week's US jobs report, which is expected to come in strong and could cement the Federal Reserve's recent hawkish stance.
Spot gold fell 0.93% to $1,761.66 per ounce by 01:39 pm EDT after touching $1,749.20, its lowest since April 15. US gold futures settled down 1% at $1,763.60.
In addition to a stronger dollar, some investors are likely anticipating better-than-expected jobs data, said Bob Haberkorn, senior market strategist at RJO Futures.
“The calls for interest rates to trend higher are going to be much louder from the Fed if we do get a better-than-expected jobs number,” weighing on gold, Haberkorn said.
The US Labor Department's nonfarm payrolls data on Friday is expected to show a gain of 690,000 jobs this month, compared with 559,000 in May, according to a poll.
Key economic data slated for release today include China's June official manufacturing PMI, seasonally-adjusted unemployment rate in Germany, Eurozone seasonally-adjusted CPI annual rate, ADP employment in the US in June, Chicago PMI in June and monthly rate of the Pending Home Sales Index (PHS) after seasonal adjustment in the US.