US Stock market
Last week, US stock market indices managed to recover some of the losses, despite rising concerns about the second wave of the coronavirus pandemic. The stock market was boosted by the Fed decision to expand the corporate bond purchase program.
The Fed will form a portfolio of corporate bonds that meet certain criteria by purchasing these bonds on the secondary market. The portfolio will include corporate bonds of US issuers with a maturity of not more than five years and an investment-grade of at least BBB-. The number of asset purchases under this program will be $750 billion.
Another positive factor for the stock market was the news that the White House was developing a $1 trillion infrastructure development plan.
Nike will present a quarterly report on June 25 after the market close. Last quarter, the company managed to avoid a significant decrease in revenue caused by lockdown restrictions due to a 30% increase in online sales.
The implementation of Nike’s strategy of transition to direct sales to consumers will help the company not only maintain a substantial part of the revenue, despite the closure of stores but will also increase profit margins.
The pound reached a 3-week minimum after the announcement of the results of the meeting of the Bank of England, at which it was decided to expand the quantitative easing program by 100 billion pounds. The Bank of England noted that they would not rush into the decision to introduce a negative interest rate.
Euro was in a phase of downward correction last week, which was facilitated by the strengthening of the dollar amid growing demand for safe-haven assets, as well as the lack of progress in negotiations on the creation of European recovery fund.
The price of oil rose to a 3-month maximum amid a declining production by oil-exporting countries. On Thursday, a meeting of the OPEC + panel was held, as a result of which countries that have not fulfilled its commitments on production cuts under OPEC + agreement reached in April have pledged to compensate for outstanding obligations.
Main events of the current week
- On Tuesday, data on manufacturing and services PMIs in Germany and the UK will be presented, as well as data on new home sales in the United States. Governor of the Bank of England Andrew Bailey will speak.
- On Wednesday, data on German business climate index and crude oil inventories will be published. The Reserve Bank of New Zealand will hold a monetary policy meeting. The regulator may decide to expand the quantitative easing program. Also, an open question for RBNZ is the possibility of introducing a negative interest rate.
- The following US macroeconomic indicators will be presented on Thursday: GDP for the first quarter, data on durable goods orders and jobless claims.