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alt_text 26 June 2017
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The Market Last Week

Global equity markets ended mixed last week. UK markets ended in the negative territory last week, weighed down by a decline in energy sector stocks. Earlier in the week, formal Brexit negotiation started between Britain and the European Union (EU). European markets ended mostly weaker during the week, led by losses in energy sector shares, amid a decline in crude oil prices. Furthermore, Eurozone’s preliminary Markit services PMI posted a more-than-expected drop in June, notching its weakest level in 5 months. Moreover, Germany’s flash Markit services PMI surprisingly eased to a 5 month low in the same month. US markets managed to buck the decline witnessed in Europe and ended stronger in the week, amid an increase in healthcare and biotechnology sector stocks. Healthcare sector surged after Obamacare was replaced by the Senate Republican health bill. In economic news, US preliminary Markit manufacturing PMI unexpectedly dropped to its lowest level since September 2016 in June. Further, flash Markit services PMI dropped to its lowest level in 3 months in June. However, initial jobless claims advanced more than market anticipations for the week ended 17 June 2017.

Currency Update

The Euro ended marginally weaker against the greenback, after the Eurozone’s composite PMI declined in June, notching its lowest level in 5 months. Further, service PMI disappointed with recording a 5-month low reading. Meanwhile, flash Markit manufacturing PMI unexpectedly surged in June, its highest rise in 74 months. The USD ended higher against its major counterparts after the US monthly existing home sales surprisingly rebounded in May. Additionally, new home sales advanced more than market forecast on a monthly basis in the same month.

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Brexit negotiations begins...

Britain and the European Union initiated formal Brexit negotiations on 19 June 2017. Additionally, the British Prime Minister, Theresa May, assured EU citizens to stay in the UK, post-Brexit, at an EU summit in Brussels. Separately, the Bank of England’s (BoE) Chief Economist, Andy Haldane, stated that he will vote for a hike in interest rates “relatively soon” as this could help prevent the BoE from falling behind the curve and tightening too fast in the future. On the other hand, the BoE’s Mark Carney signaled that it was not an appropriate time to raise interest rate following mixed signals on consumer spending and business investment in the UK.

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Week Ahead

Going ahead this week, traders will keep a tab on the US Federal Reserve (Fed) Chair, Janet Yellen, the ECB President, Mario Draghi and the BoE Governor, Mark Carney’s speech along with US Fed monetary policy report for further cues. On the data front, US annualised gross domestic product and durable goods orders along with German and Eurozone consumer price inflation will be on investors’ radar.
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