Omnis Market Update

Markets trod water last week – until Friday, when tame US employment data put paid to immediate concerns of inflation and rising interest rates, allowing equities to finish the week on a firmer footing. Investors are likely to remain sensitive to signs of inflation – or its absence – over the coming months.

US: Employment data dampen talk of an overheating economy

Gains on Friday saw the S&P 500 climb 0.6% over the week. Friday’s positivity was, perhaps counterintuitively, prompted by lacklustre employment data. Fewer jobs were created in May than expected, easing fears that the economy may be overheating.

Japan: Economic decline but exports on the up

Japan’s TOPIX index rose 0.6% (though the Nikkei 225 – a somewhat esoteric stock market index – fell 0.7%). Having struggled with rising Covid-19 infections, new initiatives to accelerate Japan’s vaccination programme were well received.

Asia: Politics to the fore in China

A Friday afternoon rally wasn’t enough to stop China’s CSI 300 index falling 0.7% over the week. US President Biden renewed restrictions on investment in 59 Chinese companies, including Huawei.

Europe: Playing catch-up in the global economic recovery

The Euro Stoxx 50 gained 0.5%, with Germany’s DAX index ending the week at an alltime high. Inflation hit the ECB’s 2% target for the first time since 2018, however there is little concern about the European economy overheating.

UK: Riding commodity prices higher

The FTSE 100 closed the week 0.7% higher. Commodity prices have risen sharply as the global economy has rebounded from the Covid-19 recession. This has benefited the UK index, which contains a relatively high weighting to commodity producers.