Market overview: The major moves in the markets in June 2021
Geopolitics and the Fed are affecting U.S. futures fluctuations
Futures on major U.S. stock indexes are demonstrating a negative trend on Thursday in anticipation of a portion of data from the U.S. labor market, according to trading data. In general, analysts note that the market is in a precarious position. On one hand, there is an improvement in the economic situation amid the deployment of vaccination against the new coronavirus. At the same time, American and European investors fear geopolitical tensions and the tightening of the Central Bank policies, which means the drying up of the inflow of new money to the market and stimulus reduction.
Europe plays with
Therefore, European stocks are dropping too. Nevertheless, the decrease in the markets does not have any fundamental basis as the external environment is very favorable, and the forthcoming meeting between the presidents of Russia and the USA encourages investors to keep the conflict-free relations in the short-term perspective.
After the news that Russia will give up the dollar in the structure of the National Welfare Fund amid the threat of sanctions, according to Russian Finance Minister Anton Siluanov, the Standard and Poor’s 500 and Nasdaq-100 stock indices were going down on Wednesday.
Joe Biden intends to make several changes to an earlier ban on U.S. individuals and entities to invest in companies that are associated with the Chinese military. The decision has led to mixed trades with Asian shares. President intends to change some provisions of the ban. According to his order, the U.S. Treasury Department will compile a list of companies that are associated with China’s defense industry as well as with the country’s surveillance technology.
The euro/dollar is declining amid signs that the Fed is gradually buying fewer bonds. According to Philadelphia Fed President Patrick Harker, there is time to think about cutting rates. He was paraphrasing previous comments by Chairman Jerome Powell that a rate hike is premature. Harker’s comments serve as the first hint that the bank is moving toward tightening. The yield on ten-year U.S. Treasuries is moving around 1.60%.
Investors are watching for any indication that central banks may begin to roll back emergency supports too.
Inflation is rising, and global food prices have jumped to their highest level in nearly 10 years. It is expected that the Fed will not change short-term interest rates at the end of its June meeting and will maintain its asset purchase program. However, in recent weeks, several Fed officials, including Fed Vice Chairman Richard Clarida, said it is time to start discussing the reduction of the number of monthly purchases at the next meetings.
Since June 2020, the Fed has been buying US Treasuries and mortgage bonds every month for a total of $120 billion. Following its April meeting, the US Central Bank said it needed to see “substantial further progress” in moving toward its goals of maximum employment and price stability to begin gradually reducing the volume of asset purchases. According to Kristina Hooper, constant communication helps to prepare everyone for this reduction.
There’s also the possibility that speculative frenzy will reignite in so-called meme stocks, such as AMC Entertainment Holdings Inc., which saw a pre-market rally after its filing cut its share count to 11.55 million.
Bitcoin was trading at around $39,000 per coin, keeping its gains after a drastic decline a short time earlier. The key event this week will be the May U.S. jobs report, which comes out Friday.
Some of the major moves in the markets in June ’21:
S&P 500 futures are down 0.6% as of 7:11 a.m. New York time
Nasdaq 100 futures down 0.9%
Dow Jones Industrial Average futures declined 0.6%
The Stoxx 600 Index decreased 0.6%
MSCI World Index changed insignificantly
Bloomberg Dollar Spot Index up 0.1%
The euro is down 0.1% to $1.2194
The British pound increased 0.1% to $1.4187
The Japanese yen fell 0.2% to 109.75 per dollar
The Japanese yen decreased 0.2% to 109.75 per dollar
10-year Treasury bond yields rose two basis points to 1.60%
Germany’s 10-year yield rose one basis point to -0.19%
Britain’s 10-year yield advanced three basis points to 0.83%
The British 10-year yield rose three basis points to 0.83%
West Texas Intermediate oil showed little changes
Gold futures are down 0.7% to $1,896 per ounce