A burst of hawkish Federal Reserve commentary earlier in the week and growing concerns about the economy continued to weigh on the major US indices last Friday, leaving the Nasdaq Composite down 1.4% for the week and the S&P 500 Index also 1.4% lower.  Last week’s losses represent the Nasdaq’s first such decline in nine weeks, and the S&P 500‘s first drop in six weeks.  Recession worries appeared to weigh especially heavily on small caps, as the Russell 2000 fell nearly 3% for the week to end at its lowest level since 5th June.   Elsewhere, European shares fell for a fifth consecutive session on Friday and booked a 2.5% weekly loss, the most since March, as investors grappled with the impact of major central banks’ monetary tightening measures and disappointing economic data.  

Summary for 26.06.2023 

  • Asian equity markets were mixed on Monday as investors continued to assess the global economic and monetary policy outlook.  Shares in Japan, South Korea and Hong Kong advanced, while Australian and mainland China shares declined.  
  • US and European equity futures were rising about 0.3% each this morning ahead of the final week of trading in June. 
  • Oil prices jumped as much as 1.4% this morning before giving back most of the gains after a revolt by Russian mercenaries over the weekend raised concerns about political instability in Russia and the potential impact on oil supply from one of the world’s largest producers.  Meanwhile, markets fretted about the prospect of further monetary tightening that could hurt global growth and future energy demand. 
  • An eerie calm fell on Russia after the dramatic end to an armed uprising that posed the greatest threat to Vladimir Putin’s almost quarter-century rule.  The man who led the insurrection has gone uncharacteristically quiet.  The president hasn’t been seen in public since denouncing the mutiny as “treason” and threatening “harsh” punishment that never transpired.  In a bewildering 24 hours, a transfixed international audience watched troops loyal to Russian mercenary Yevgeny Prigozhin advance hundreds of miles toward Moscow at breakneck speed only for him to suddenly call off the assault and agree to go into exile with all charges dropped in a late-night deal. 
  • China’s consumer-driven recovery is showing more signs of losing momentum as spending slows on everything from holiday travel to cars and homes, adding to expectations for more stimulus to support the economy.  Domestic travel spending during the recent holiday for the dragon-boat festival was lower than pre-pandemic levels, according to official data released this weekend.  Home sales figures are below the level in previous years, while estimates for June car sales showed a drop from a year ago.   
  • S&P Global said on Friday that its Flash US Manufacturing PMI fell to 46.3 in June from 48.4 in May.  June’s decline was bigger than analysts had expected and left the index at a six-month low.  S&P’s Services Business Activity Index fell to 54.1 in June from 54.9 in May. 
  • Eurozone business growth virtually stalled in June as the downturn in manufacturing deepened while activity in the bloc’s dominant services industry barely expanded, a survey showed on Friday.  The HCOB’s flash Composite PMI sank to a five-month low of 50.3 for the bloc from May’s 52.8. 
  • GSK plc last Friday announced it reached a confidential settlement of litigation in the US over claims that the British drugmaker’s heartburn drug Zantac caused cancer.   Shares rallied by over 6% on the day. 
  • Novo Nordisk on Sunday said a late-stage trial found that a high-dose oral version of its drug semaglutide helped overweight or obese adults lose 15% of their body weight over a period of 68 weeks, in line with recent results for other experimental obesity pills.   
  • In the week ahead, the spotlight will be on the Bank Stress Test results in the US and data, including personal income and spending, as well as the PCE price indices.  Additionally, it will be interesting to follow durable goods orders, the final ready of GDP growth, Michigan Consumer Confidence, and new and pending home sales.  Moreover, several central bank officials, including Fed Chair Powell and ECB President Lagarde, will attend the ECB Forum on Central Banking in Portugal.  Elsewhere, investors will be closely monitoring the inflation rate released for Canada and the Euro Area.  Finally, in China, the NBS Manufacturing and non-manufacturing PMIs will be released, while in Germany, the Ifo Business Climate Index and GFK Consumer Confidence will be of importance.