Global equity markets ended mostly firmer last week, ahead of US corporate earnings season. UK markets ended the week in positive territory, as the British Pound weakened, following the US President, Donald Trump’s comments on Brexit. On the data front, UK’s NIESR gross domestic product (GDP) estimate rose in the second quarter of 2018. Additionally, trade deficit surprisingly narrowed in May. Moreover, construction output jumped more than market expectations on a monthly basis in the same month. On the flipside, the nation’s monthly industrial production unexpectedly dropped in May. Further, monthly manufacturing production rose at a slower-than-anticipated pace in May. The Rightmove house price index eased on a monthly basis in July. European markets ended the week on a positive footing, boosted by gains in industrial sector stocks. Data showed that the Eurozone’s Sentix investor confidence index surprisingly climbed in July. Moreover, industrial production advanced more than market forecast on a monthly basis in May. Meanwhile, the region’s ZEW economic sentiment index recorded a drop in July. Separately, Germany’s consumer price index (CPI) rose at par with market expectations on an annual basis in June. Additionally, the nation’s trade surplus widened more-than-expected in May. US markets ended the week in green, amid optimism over corporate earnings reports. On the macro front, the US annual consumer price inflation reached a 6-year high level in June. Additionally, the producer price index (PPI) climbed to its highest level since November 2011 on a yearly basis in June. Adding to the positive sentiment, the nation’s initial jobless claims declined more-than-expected to a two-month low level in the week ended 07 July 2018. Further, monthly budget deficit narrowed more than market anticipations in June. Average hourly earnings recorded a flat reading on an annual basis in June. On the contrary, the nations’ NFIB small business optimism index registered a decline in June. Moreover, the Michigan consumer sentiment index dropped more than market forecast in July. Asian markets ended on a stronger footing last week, tracking gains in their US counterparts.


Currency Update


The EUR ended lower against the USD, after the European Commission downgraded Eurozone’s growth outlook, citing trade war concerns. The British Pound ended weaker against the greenback, following the resignation of two key UK officials namely, Foreign Secretary, Boris Johnson and Brexit Minister, David Davis and after the US President, Donald Trump threatened that there would be no US-UK trade deal because of Theresa May’s Brexit policy. The US Dollar ended stronger against its major counterparts last week, amid US-China trade fears and following comments from President, Donald Trump regarding Brexit.



Fed plays down trade woes and hints at bright economic outlook


The Federal Reserve (Fed), in its semi-annual Monetary Policy Report, revealed that the US economic activity increased “at a solid pace” over the first half of 2018 and reiterated the Central Bank’s expectations for gradual rate hikes. However, the report highlighted concerns over domestic and global risks from trade worries and rising oil prices.



The Week Ahead


Going ahead this week, investors will keep a tab on the Fed Chairman, Jerome Powell’s testimony and the Fed’s Beige Book along with the US advance retail sales, initial jobless claims, industrial and manufacturing production for further direction. Additionally, the UK’s claimant count rate, ILO unemployment rate, average weekly earnings, CPI, PPI and public-sector net borrowing along with the Eurozone’s CPI and PPI will attract significant amount of investor attention.



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