Today’s Stock Exchanges, July 7th. Markets under tension over the prospects of further rate hikes. US yields at 16-year highs, job report coming soon
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The markets remain tense looking at possible new tightening on the cost of money by the Federal Reserve. Yesterday these bets were ignited first by the minutes of the June meeting, in which the governors clearly agreed on the opportunity to do something more in 2023 to fight inflation, and then by the ADP report on private employment, which doubled the expectations demonstrating that the American economy is holding up despite everything. Today will be the turn of the much awaited general report. In the meantime, the cost of American debt has started to rise again along the entire yield curve: the two-year bond, which is more sensitive to monetary policies, closed at 4.99% after reaching a 16-year high and the ten-year bond is above 4%. Attention also in China, where the pressure is growing for the authorities to pass from words to deeds in concretely supporting the economy: there the markets, worried, are experiencing the third negative week in a row.
European stock markets open weak
Weak and declining opening for the main European stock exchanges awaiting the data on US jobs. In Frankfurt the Dax scores -0.07% to 15,517.95 points, in London the FTSE 100 drops 0.24% to 7,262.91 points, in Paris the Cac 40 drops by 0.02% to 7,075.24 points , in Madrid the Ibex-35 by 0.50% at 9,239.00 points. In Milan, the Ftse Mib is flat at -0.06%.
The spread opens stable at 174 points
Smooth start for the spread between 10-year BTPs and Bunds: the differential marks 174 basis points, the same level as yesterday’s closing. The Treasury yield is 4.35%.
Yellen in Beijing: “Worried about export controls. Separation of economies virtually impossible”
US Treasury Secretary Janet Yellen expressed her concern after Beijing imposed export restrictions on two essential metals for semiconductors (gallium and germanium), of which China is the main producer. “I am concerned about China’s recently announced new export controls (…) We are evaluating the impact of these measures,” Yellen told US business leaders on her first day of visit to Beijing.
US Treasury Secretary Janet Yellen called de-coupling “virtually impossible” between China and the US, stressing that Washington is not seeking “the large-scale separation of our economies”. You said this during a meeting with US companies in China, after arriving yesterday in Beijing for a four-day visit. At the same time, Yellen said in meetings she will have with Chinese officials she will raise US concerns about subsidies to state-owned enterprises, market access barriers for foreign firms and what she called “punitive actions against American companies.
Tokyo closes down 1.17%
Tokyo stocks closed lower on Wall Street’s heels on fears of a further interest rate hike by the Fed. Investors await key US jobs data due later in the day. The benchmark Nikkei 225 index fell 1.17% to 32,388.42, while the Topix fell 0.97% to finish at 2,254.90 points.
Germany, industrial production down
German industrial production fell 0.2% in May from the previous month, the federal statistics office said. Analysts’ expectations pointed to a stagnation in production in the month.
Stock markets weak in Asia
Asian stock markets are running weak and declining. Hong Kong shares are down, led by technology stocks: the Hang Seng scores -0.33%. Chinese markets are also uncertain, while cautious investors await further stimulus from Beijing and signals that could affect Sino-US relations. Shanghai is flat at +0.04%, Shenzhen is down 0.79%. In Tokyo, the Nikkei loses 0.38%.
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