Macro Roundup (Jul 1)

SHANGHAI, Jul 1 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar gained on Wednesday, headed for its biggest monthly rise since November 2016, supported overall by a surprisingly hawkish shift in the US Federal Reserve’s rates outlook at a meeting early this month, as well as concern over the spread of the Delta coronavirus variant.

The dollar has gained about 2.6% against a basket of currencies this month, partly in the wake of the Fed stance. Traders are looking to Friday’s US nonfarm payrolls report for a likely confirmation of a shift in monetary policy.

The greenback also edged higher after data showed US private payrolls increased more than expected in June by 692,000 jobs. Data for May though was revised lower to show 886,000 jobs added instead of the initially reported 978,000. Economists polled by Reuters had forecast private payrolls would increase by 600,000 jobs.

“The strong dollar narrative has taken over for the short term,” said Erik Nelson, macro strategist, at Wells Fargo Securities in New York.

“If we see the US employment number come out stronger than expected, then this reinforces the narrative that the Fed may remove accommodation faster than previously expected. That’s going to be dollar-positive,” he added.

On Wall Street, US stock futures were steady in overnight trading on Wednesday as investors gear up for the second half of 2021.

Dow futures rose about 50 points. S&P 500 futures gained 0.15% and Nasdaq 100 futures rose 0.05%.

On Wednesday, the Dow Jones Industrial Average rose 210 points, helped by a 2.7% pop in Walmart. The S&P 500 registered a gain of 0.13% to close at a fresh record of 4,297.50.

The Nasdaq Composite was the relative underperformer, dipping 0.2% as Facebook, Amazon, Netflix and Google-parent Alphabet closed lower.

The major averages closed out a strong first half of 2021 and second quarter on Wednesday.

For the year, the Dow is up 12.7%, hovering about 1.7% below its all-time high. The S&P 500 rallied 14.4% in the first half of 2021 and the technology-heavy Nasdaq Composite rose 12.5%.

The S&P 500 notched its fifth positive month in a row, rising 2.2% in June. The broad index also posted its best first half since 2019.

Oil prices rose on Wednesday, heading for monthly and quarterly gains, after data showed US crude stockpiles were shrinking and an OPEC report foresaw an undersupplied market this year.

The Brent crude contract for August, due to expire on Wednesday, was up 28 cents, or 0.4% at $75.04 a barrel by 11:22 (1522 GMT.) The September contract was up 17 cents at $74.45 a barrel. US West Texas Intermediate crude (WTI) was up 23 cents, or 0.3% at $73.21 a barrel.

Both benchmarks are just below highs last reached in 2018, and are set to record their seventh monthly gain in the past eight months.

Gold nudged up on Wednesday but was headed for its largest monthly decline since November 2016, as investors were wary ahead of the upcoming US jobs data that could intensify fears over the US Federal Reserve easing its asset purchases.

Spot gold rose 0.4% to $1,768.78 per ounce by 1:52 pm EDT (1752 GMT) having touched its lowest since April 15 at $1,749.20 per ounce on Tuesday. US gold futures settled up 0.5% at $1,771.60.

Michael Matousek, head trader at US Global Investors, attributed gold’s slight uptick to some bargain buying in an “oversold” market with prices having retreated as much as 8.6% from the highs hit in early June.

Gold prices have been weighed down by the Fed’s sudden hawkish shift.

The pan-European Stoxx 600 provisionally closed down by 0.8% on Wednesday, with autos shares sinking 1.9% to lead the losses. The benchmark was still up over 13% year-to-date, however.

European investors reacted to a host of economic data on Wednesday. U.K. first-quarter GDP was confirmed at -1.6% quarter-on-quarter, slightly below expectations, while business investment fell 10.7% quarterly as the country endured stringent lockdown measures.

Global markets are looking ahead to potentially significant US labor market data later in the week.