The major US equity indices faded late in the session Friday. However, they were still higher for the week as investors cheered lower-than-expected inflation readings and a Federal Reserve decision not to raise its benchmark lending rate at its midweek meeting – though additional hikes could come later this summer.  The S&P 500 Index was up 2.6% for the week, the benchmark’s strongest week since March, while the Nasdaq Composite Index and the Dow Jones Industrial Average were up 3.2% and 12%, respectively.  In Europe, the Euro Stoxx 50 rose to a 4-week high on Friday, with luxury and defensive shares leading the gains.  For the whole week, European shares booked a 2.1% gain.  

Summary for 19.06.2023 

  • Most Asian equities moved in a flat-to-low range on Monday, as investors turned cautious ahead of major events this week, with China’s central bank set to decide on its loan prime rate on Tuesday.  Inflation figures for Japan, as well as PMI data for Japan and Australia, are also slated for this week.  Shares in Japan, South Korea, Hong Kong and mainland China declined, while Australian equities advanced. 
  • European shares are set to open lower following a mildly risk-off day in Asia as investors parsed signs of improving ties between Washington and Beijing.  Meantime, US markets will remain closed today for a holiday. 
  • Oil prices fell in Asian trade this morning after logging strong gains last week, as signs of strong refinery demand in China helped offset somewhat hawkish signals from the Fed and weak economic indicators from around the globe.  
  • There were tentative signs of progress from Blinken’s first day in China, as the top US diplomat held talks with Foreign Minister Qin Gang on Sunday, which both sides described as “candid” and lasted 7 ½ hours – much longer than planned.  Tangible initiatives have included a discussion about increasing flights between the two countries and encouraging educational exchanges.   
  • The University of Michigan consumer sentiment for the US increased to 63.9 in June, the highest in four months, from 59.2 in May, preliminary figures showed.  Figures beat forecasts of 60, reflecting greater optimism as inflation eased and policymakers resolved the debt ceiling crisis. 
  • Hourly labour costs in the Euro Area rose by 5% year-over-year in the first quarter, easing from a 5.6% increase in the previous period and compared with market expectations of 3.3%. 
  • Malta’s annual inflation rate edged down to 6.3% in May from 6.4% a month earlier.  It marked the lowest reading since June 2022, mainly due to a slowdown in prices of food and non-alcoholic beverages and miscellaneous goods and services.  On the other hand, inflation accelerated for recreation and culture, while remaining unchanged for health and education.  On a monthly basis, consumer prices advanced 1.6%, easing from a 3.1% gain in April. 
  • Goldman Sachs became the latest Wall Street bank to downgrade its growth forecast for China, cutting its GDP forecast for 2023 from 6% to 5.4%.  The bank cited that the recovery from the stringent Covid-19 lockdown measures continues to disappoint through soft economic data, as well as mounting pressure on its property sector.  While the firm sees further stimulus to come, it notes that the measures will not be enough to overcome the greater problems that it faces, namely weakened sentiment.  The latest revision from Goldman Sachs follows the likes of UBS, Bank of America and JPMorgan who have all downgraded their China full-year GDP estimates.. 
  • This week in the US, the spotlight will be on speeches by several Fed officials, including Chair Jerome Powell’s testimony before Congress.  Investors will also closely follow flash PMI services, manufacturing readings, and housing data.  It will be a busy week in the UK, with the Bank of England’s interest rate decision, as well as releases for the inflation rate, retail sales, and consumer confidence.  Additionally, central banks in China and Turkey will provide details on the course of their monetary policy.  Finally, flash PMIs for June will offer a first look into economic conditions in Australia, Japan, the UK, the Euro Area, Germany, and France.