U.S. stocks were closed on Monday for the independence day holdiday. International equities were lower as the dispute between Saudi Arabia and the United Arab Emirates remains unresolved increasing uncertainty whether the Organization for Petroleum Exporting Countries and their allies (OPEC+) will pump more crude to ease an inflationary price surge or allow crude to extend its rally. Under the new quota it is seeking, the UAE wants to boost its output by almost 700,000 barrels a day. In absence of an agreement, Saudi Prince Abdulaziz said there is a fall-back deal in place under which oil output does not increase in August or the rest of the year, potentially risking an inflationary oil price spike.
The breakdown of OPEC talks led the U.S. markets to open lower following the holiday but markets recovered by the end of the trading session. Markets were mixed as concerns arose that the economic recovery post the pandemic was plateauing following the release of Germany’s investor confidence gauge. The survey showed supply bottlenecks weighed on the manufacturing sector and spreading COVID-19 variants threaten the revival in services. The ZEW gauge of expectations slipped to 63.3 in June, down from 79.8 in May and well below consensus of 75.2, reaching the lowest since January.
On Wednesday, U.S. markets were steady ahead of the release of the FOMC meeting minutes. The minutes for the June meeting did not contain any surprises nor new perspectives to inform on the increase in the median 2023 dot in the latest forecasts. The minutes reiterated that “substantial further progress” remains a way off. Also, the outlook remains very cloudy, with some participants interpreting recent data as unclear about underlying momentum and assessing that more information in coming months would be necessary to take appropriate action.
U.S. stocks dropped on Thursday from record highs amid growing anxiety that the spread of COVID-19 variants will upend growth expectations, undoing popular reflation trades. International markets were lower as China unexpectedly shifted its tone, suggesting the pace of the country’s recovery may be weaker than it appears. The CSI 300 Index of stocks slid as much as 1.2% Thursday after policymakers hinted companies may need fresh funding and the People’s Bank of China (PBoC) could lower the reserve requirement ratio (RRR). The yuan also fell, and bond futures rose by the most in a year. Indeed, the State Council’s comments were an abrupt change in rhetoric with officials spending much of the last year stressing how excessive global liquidity risked fueling asset bubbles.
source https://richarddri.ca/equities-weaker-following-the-holiday-long-weekend/
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