Summary of Yesterday's Session
Yesterday's session demonstrated notable resilience in financial markets despite global economic uncertainties. The $S&P 500(.SPX)$ and $NASDAQ(.IXIC)$ both reached record levels, rising by 0.3%. The $DJIA(.DJI)$ also increased by 0.2%. Defensive sectors such as utilities and healthcare were favored by investors seeking to shield themselves from volatility.
$Apple(AAPL)$ , however, saw a 1.9% decline in its stock despite announcing its artificial intelligence (AI) ambitions at the 2024 Worldwide Developers Conference. The company unveiled new software features under the banner "Apple Intelligence," integrating writing tools, image generation, and an enhanced Siri. These features will be available on iPhone 15 Pro models and later, potentially driving users to upgrade their devices.
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Internationally, European markets were affected by election results, with a significant rise in far-right parties in the European Parliament, particularly in Germany and France. France's CAC 40 closed down 1.3%, while the pan-European STOXX 600 ended slightly lower by 0.3%.
Key Economic Events
Today, UK labor market data will be in focus. An anticipated acceleration in wage growth could increase inflationary pressures, complicating the Bank of England's (BoE) efforts to reduce interest rates, which are currently at their highest in 16 years. European Central Bank (ECB) President Christine Lagarde recently emphasized the need for caution amid economic uncertainties.
In the US, bond traders are anticipating higher interest rates through 2024 and are looking to this week’s Federal Reserve (Fed) meeting for insights. Markets are particularly interested in the updated economic projections and the dot plot, which could provide indications on interest rates through 2025 and beyond.
Oil prices, after a sudden rally, will also be closely monitored. Brent futures remain stable around $81 a barrel after a significant jump. Traders are awaiting reports from OPEC and the International Energy Agency (IEA) for market outlook clues.
Market Scenario
This week’s market scenario hinges significantly on economic data and policy decisions. In the US, May inflation data and the Fed’s decisions will be closely watched. Forecasts indicate a 0.1% increase in the Consumer Price Index (CPI) for May, with an annual rise of 3.4%, unchanged from the previous month. The core CPI, excluding food and energy, is expected to increase by 0.3% monthly and 3.5% annually, slightly down from April.
Markets anticipate that the Fed will keep interest rates unchanged, with potentially significant remarks from Jerome Powell during his press conference. Updated economic projections may indicate a slower reduction in interest rates in 2024, influenced by a robust labor market and persistent inflation.
The oil market will remain under scrutiny following the price surge, with OPEC and IEA reports providing crucial outlooks. In Europe, discussions on maintaining gas flow through a key Russia-Ukraine pipeline could influence energy markets.
Conclusion
This week is poised to be crucial for financial markets, with significant economic data and policy decisions expected on both sides of the Atlantic. Investors will need to navigate cautiously, considering multiple factors influencing interest rates, inflation, and energy outlooks…
The information contained in this summary is based on data available at the time of writing and is subject to change. The opinions expressed do not constitute financial advice, and investors should conduct their own research before making investment decisions.
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