Weekly Market Update

Indexes

Over the past week, Asia has been recovering. The Hang Seng gained 1.8%, the Shanghai Composite 2.3% but the Nikkei recorded a weekly performance of only 0.3%.

In Europe, green dominates. The CAC40 recovered 0.8%, the Dax also gained 0.8% and the Footsie 1.6%. Regarding the peripheral countries of the euro zone, Spain and Portugal are somewhat behind, with gains of only 0.5% and 0.2% while Italy is up 0.9%.

In the US, the NASDAQ 100 and S&P500 continued their record-breaking run, with gains of 2.3 and 2.7%. The Dow Jones is still 2% off its previous highs from May 10, but is up 3.3% over the past five days.

Commodities

It is time for consolidation on oil markets, which are catching their breath after a long and powerful bullish rally. The US benchmark is trading at its highest level of the year, above USD 73, as is Brent at USD 75 per barrel. It seems that the bullish fuel is running out to carry prices higher. As a result, traders are limiting their moves as they await the next OPEC+ meeting on Thursday to decide on production levels.

Precious metals are regaining some height. The gold metal is struggling to regain positive momentum despite an easing in US 10-year real rates and is trading around USD 1,785 per ounce.

The base metals segment had a bullish week, despite China's attempts to mitigate the upward pressure on prices. Beijing did decide to sell off some of its strategic reserves in order to control price inflation, but this probably did not have the desired effect, as markets were expecting much more drastic measures. Copper is trading near USD 9,300.

In agricultural commodities, corn, which is trading at USD 653 per bushel in Chicago, is back on the upswing as China's appetite for imports increases significantly. On the other hand, lumber is on a new week of decline, as supply is quickly adjusting to demand.

Foreign exchange market

The euro rallied a bit against the dollar to USD 1.1939, after breaking the USD 1.19 threshold after the Fed meeting last week. Good European data, both in the German Ifo and June flash PMI indicators, fueled the rise, but failed to lift the single currency above USD 1.1950. The British pound lost ground against the euro last week, at GBP 0.858 per EUR, as the Bank of England, while acknowledging a stronger British economy, gave no signs of tightening monetary policy.

Earlier signals suggested that the central bank was going to be a little firmer. A few words on the Mexican peso, which gained ground against the dollar after the Bank of Mexico decided to raise its key interest rate from 4 to 4.25%, in an attempt to counter inflation of 6%, well above the upper limit that the BoM is willing to grant itself, even on a transitory basis (i.e. 4%). The USD is trading at MXN 19.811.