Market movers today
Today is a very quiet one in terms of data releases.
In the US, we are set to receive core capex goods orders for May. The new orders component has levelled off recently, in line with the general cooling of the manufacturing sector. We estimate a slight increase of 0.2% m/m in goods orders in May.
In the euro area, the German ifo expectation is due for release today. The ifo expectation increased from 105.2 in April to 106.5 in May, which is its highest level since February 2014. We expect this figure to decline to 106.1 in June, as the German ZEW and Sent ix have both declined in June, and the weakening business cycle indicators in the US and China could still weigh on the German business expectation.
Selected market news
On Friday in the euro area, PMI figures were due out . The euro area manufacturing PMI continued higher in June to 57.3 from 57.0 in May despite the weakness seen in the US and China. In our view, weaker global growth will continue to weigh on the euro area and we look for weaker headline manufacturing PMI in coming months. The service PMI came out weak at 54.7 in June from 56.3 in May, which is the lowest level since January 2017. The lower service PMI figure could reflect slower real wage growth, which has followed as inflation has picked up without nominal wage growth following suit . Looking ahead, we continue to expect this to be a headwind for consumers.
On Friday, we also got US PMI manufacturing and services for June. Manufacturing PMI fell unexpectedly to 52.1 in June (market consensus and our expectation was for a slight increase to 53) from 52.7 in May. Service PMI also came out lower than expected at 53 in June (consensus was at 53.5) from 53.6 in May.
It has been a calm session in global financial markets this morning. Asian stock markets have mainly been moving sideways, though slightly in the green and in fixed income markets, changes in the US 10-year government benchmark bond yield have been subdued since Friday. Brent oil has climbed slightly higher to around USD46/bbl at the time of writing.
