Daily Markets: First Look at the US Economy in June

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The big picture of today

Asian stock indices ended the day largely higher after the Nasdaq Composite Index hit a new record yesterday. While the Japanese Nikkei was down 0.3% on the day, the Hong Kong Hang Seng rose 1.8%, South Korea’s Kospi ended up 0.4% and the Shanghai Composite was increased by 0.3%. By comparison, European stock indices were down by midday and US futures are showing modest progress when those markets open later this morning.

On the economic front, we will have a first overview of the evolution of the US economy in June thanks to the IHS Markit Flash June Manufacturing and Services PMI. Another area of ​​investor interest will be indications of job creation and job gains during the month. Meanwhile, Senate Majority Leader Charles Schumer and House Speaker Nancy Pelosi will meet with White House officials on Wednesday to discuss the way forward on infrastructure. The reported conversation will focus on a budget resolution that could pave the way for a Senate bill to pass with only Democratic votes amid bipartisan talks.

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International economy

This morning, we received June Flash Manufacturing & Services PMIs from IHS Markit:

  • The Australian manufacturing PMI index for June fell from 60.4 to 58.4. The services PMI also fell from 58.0 to 56.0.
  • Japan’s Jibun Bank’s manufacturing PMI for the month fell to 51.5 from its previous reading of 53, while the services PMI rose to 47.2 from 46.5 in May.
  • The eurozone flash manufacturing PMI index stood at 63.1 for June, matching the previous month and exceeding the expected 62.1. The service sector posted a reading of 58.0 in June against the consensus 57.8 and 55.2 in May.
  • The UK’s Markit / CIP manufacturing PMI fell to 64.2 in June from 65.6 the month before, but topped consensus forecasts which called for a drop to 64. The initial reading for the services sector in the UK country also slipped in June to 61.7 from 62.9 in May. , missing the expected 63.

Domestical economy

The Delta variant of the coronavirus, first identified in India, is now responsible for 20% of every new case of Covid-19 in the United States. Considering the increase in vaccinations, it’s unclear how much of a problem this could be.

Yesterday, we learned that existing home sales fell -0.9% month-on-month in May after falling -2.7% in April, the fourth consecutive month-on-month decline. On a more constructive note, relative to sales, inventories of total existing homes and single-family homes increased. That said, the increase has been very small compared to the significant drops in supply since the start of the pandemic. The Richmond Fed manufacturing index rose to 22 in June from 18 in May, the third consecutive monthly increase.

Later today we will have June IHS Markit Flash readings for US Manufacturing and Services PMIs as well as May data on new home sales. We will also get the usual weekly data for Wednesday, namely the Mortgage Applications Index and EIA crude oil inventories.

Markets

The S&P 500 gained 0.5% yesterday following optimistic comments on the economy from Fed Chairman Powell during his testimony in Congress. While there is nothing new on the monetary policy front, Powell shared the Fed’s view that factors impacting the labor market and contributing to rising levels of employment Inflation is expected to both be transient and see dynamic job creation this fall. The Nasdaq Composite ended up 0.8% on the day, closing again at a record high, while the Dow Jones Industrial Average and Russell 2000 rose 0.2% and 0.4% respectively.

After Brent crude hit $ 75 a barrel for the first time in more than two years, oil prices paused following reports that Russia and other OPEC + countries may decide to increase more their production from August.

At one point in the morning trading, Bitcoin was down double-digit and down 48% from its all-time high, but managed to recover from those closings, ending the day in positive territory.

Actions to watch

According to an article by CEO Mark Zuckerberg, Facebook (FB) brings its Shops functionality to its WhatsApp messaging application and Facebook Marketplace.

Intel (INTC) is restructuring its data platform group into two new units: the Datacenter and AI unit and the Network and Edge group. The company is also creating two new business units: the Software and Advanced Technologies group and the Accelerated Computer Systems and Graphics group.

Corning (GLW) announced “moderate” price increases for its display glass substrate prices for 3Q 2021 due to rising logistics and material costs and other operational expenses during the prolonged glass shortage.

Platoon (PTON) announced a new corporate wellness program that allows employers to offer subsidized exercise accounts to their workers.

With licensee Maxim’s Caterers Limited, Shake Shack (SHAK) will open 10 new cabins in territories in China by 2031.

Actions of the electric vehicle manufacturer Xpeng (XPEV) are up following news that the company has been granted approval to list its shares on the Hong Kong Stock Exchange

Nikola Corporation (NKLA) and Wabash Valley Resources announced that Nikola is investing $ 50 million in cash and stocks in exchange for a 20% stake in the clean hydrogen project under development in West Terre Haute, Indiana.

Amazon (AMZN) announced 14 new renewable energy projects in the United States, Canada, Finland and Spain. The new projects bring Amazon’s total investments in renewables to date to 10 gigawatts (GW) of power generation capacity, roughly enough to power 2.5 million American homes.

Sprinkler (CXM) valued its IPO offering of 16.625 million shares at $ 16.00 per share, below the target range of $ 18 to $ 20.

After today’s market closes, Home KB (KBH) will be among the companies that will publish their quarterly results. Those looking to get a glimpse of these reports and more to come in the coming days should visit Nasdaq earnings calendar page.

On the horizon

  • June 24: durable goods orders, wholesale inventories, weekly jobless claims, Q1 GDP price index, merchandise trade balance, Q1 corporate profits
  • June 25: Personal income and spending, PCE price index, Michigan consumer sentiment
  • June 28: Dallas Fed manufacturing index
  • June 29: S & P / Case-Shiller Home Price Index, Conference Board Consumer Confidence, API Crude Oil Stocks
  • June 30: ADP Jobs Report, Chicago PMI, Pending Home Sales, EIA Energy Stocks
  • July 1: weekly jobless claims, Markit Manufacturing PMI (final), Construction expenditure, ISM Manufacturing PMI
  • July 2: Trade balance, non-farm wages, factory orders
  • July 6: Markit Services PMI (final), ISM Non-Manufacturing PMI, IBD / TIPP Economic Optimism
  • July 7: JOLT Job Opening Report, FOMC Debrief, API Crude Oil Inventories
  • July 8: Weekly unemployment registrations, EIA Energy actions
  • July 9: Inventories of wholesalers
  • July 13: Inflation, monthly federal budget statement, API crude oil inventories
  • July 14: Producer Price Index, Crude Oil Stocks EIA
  • July 15: weekly jobless claims, NY Empire State Manufacturing Index, Philly Fed Manufacturing Index, industrial production, import and export prices
  • July 16: Retail Sales, Michigan Consumer Sentiment, Business Inventories, Net Capital Flows, Foreign Bond Investment
  • July 19: NAHB Housing Market Index
  • July 20: Building permits, housing starts, API crude oil inventories
  • July 21: EIA Energy shares
  • July 22: Weekly jobless claims, Chicago Fed national activity index, existing home sales
  • July 23: Markit Manufacturing PMI (flash), Markit Services PMI (flash)

Thought of the day

“I don’t have any special talents. I am only passionately curious. “Albert Einstein

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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