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In the Markets – Week-Ending June 3

by Peter J. Creedon

Newsletter: In the Markets – Week-Ending June 3
Crystal Brook Advisors
We Make Financial Planning Crystal Clear

United States: Wagers on rising U.S. rates last week hit their highest level since 2014, a profound shift from the market’s mind-set as recently as a month ago.(1) The volatile construction spending report delivered a monthly surprise, falling 1.8 percent, while the consensus looked for a 0.6 percent increase.(2) U.S. companies slowed their hiring drastically in May to 38,000 and unemployment fell as people dropped out of the labor force, a bleak picture for the Fed before its June policy meeting on interest rates.(3)

Europe: Euro area inflation stayed negative in May, according to a flash estimate from Eurostat, edging up to -0.1% from -0.2% the month before.(4)

Asia: Brisk consumer spending propelled growth in India’s economy to 7.6% in the year that ended March 31, the fastest pace in at least four years.(5) Prime Minister Shinzo Abe is postponing an increase to Japan’s sales tax (from 8% to 10%) by two-and-a-half years until 2019.(6)

Monday 05/30

• Volkswagen swung to profit in the first quarter after reporting a heavy loss in 2015 on charges related to the diesel-engine scandal at the German auto maker.(7)
• Chinese stock futures flash-crashed on extreme volume overnight, marking the second sudden swing to rattle traders this month.(8)

Tuesday 05/31

• Stocks, the dollar and short-term Treasury yields are all hovering near multi-week highs as markets appear increasingly at ease with the prospect of a summer rise in US interest rates.(9)
• Analysts are once again raising their oil price forecasts, in a reflection of falling concerns about the glut in crude supply.(10)
• Consumer spending rose 1.0 percent in April with real spending activity rising 0.6 percent for the month. Income growth remained strong while the Fed’s preferred inflation measure is up 1.1 percent from a year ago.(11)

Wednesday 06/01

• Global stocks started the month softer as commodity prices fell and manufacturing data from China and Europe failed to reassure investors about the health of the world economy.(12)
• SoftBank said Tuesday it would sell at least $7.9 billion of its stock in Chinese e-commerce company Alibaba.(13)
• Xiaomi to buy 1000 patents from Microsoft to acquire the intellectual property it needs to broaden its reach.(14)

Thursday 06/02

• U.S. stocks and crude prices fell Thursday after meetings of the ECB and OPEC ended without major changes.(15)
• Uber receives $3.5 billion from Saudi Arabia’s Public Investment Fund.(16)

Friday 06/03

• May’s job gains disappointed at 38,000. Even excluding strike effects, job gains have clearly slowed and signal weaker growth in 2016 compared to 2015. A Fed move for June is off the table.(17)
• Stocks, Treasury yields and the dollar fell after jobs data threw a rate increase into question.(18)
• A sharp narrowing in the real trade deficit in March set to boost Q2 GDP growth.(19)

 

Market Close
U.S. stocks retreated on Friday after economic data indicated that the U.S. economy may not be as robust as thought, dampening expectations of a Federal Reserve interest-rate hike in June. The Labor Department said U.S. companies created just 38,000 new jobs last month, significantly below the 155,000 forecast by economists in a MarketWatch survey. The news comes at a time when investors have come to accept a summer rate increase as a sure bet on steady economic recovery but the weak jobs data are likely to contribute to more volatility in the market. The S&P 500 SPX, -0.29% fell 6 points, or 0.3%, to close at 2,099 to finish the week flat. The Dow Jones Industrial Average DJIA, -0.18% dropped 31 points, or 0.2%, to end at 17,807 for a weekly loss of 0.4%. The Nasdaq COMP, -0.58% shed 29 points, or 0.6%, to close at 4,942 but finished 0.2% higher for the week.(20)

Contributor: Oscar Xia

Sources:
(1) Source: Wall Street Journal
(2) Source: Wells Fargo Economics Group
(3) Source: Wall Street Journal
(4) Source: Seeking Alpha
(5) Source: Wall Street Journal
(6) Source: Seeking Alpha
(7) Source: Wall Street Journal
(8) Source: Seeking Alpha
(9) Source: Financial Times
(10) Source: Wall Street Journal
(11) Source: Wells Fargo Economics Group
(12) Source: Wall Street Journal
(13) Source: Wall Street Journal
(14) Source: Wall Street Journal
(15) Source: Wall Street Journal
(16) Source: New York Times
(17) Source: Wells Fargo Economics Group
(18) Source: Wall Street Journal
(19) Source: Wells Fargo Economics Group
(20) Source: MarketWatch