KEEP CALM AND CARRY ON
World share markets were proving resilient so far, with S&P 500 futures off just 0.1 per cent and Nasdaq futures down 0.2 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 per cent, while Chinese blue chips dipped 0.2 per cent. Japan’s Nikkei eased 0.2 per cent, though surveys showed manufacturing activity there returned to growth in June after nearly a year of contraction.
EUROSTOXX 50 futures lost 0.4 per cent, while FTSE futures fell 0.3 per cent and DAX futures slipped 0.4 per cent. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter.
The dollar gained 0.7 per cent on the Japanese yen to 147.07 yen , while the euro dipped 0.2 per cent to US$1.1497. The dollar index firmed marginally to 99.042.
There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising 2 basis points to 4.395 per cent.
Futures for Federal Reserve interest rates were a tick lower, likely reflecting concerns a sustained rise in oil prices would add to inflationary pressures at a time when tariffs were just being felt in US prices.
Markets are still pricing only a slim chance the Fed will cut at its next meeting on Jul 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing.
Most other Fed members, including Chair Jerome Powell, have been more cautious on policy leading markets to wager a cut is far more likely in September.
At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which is certain to cover the potential impact of President Donald Trump’s tariffs and the attack on Iran.
The Middle East will be high on the agenda at a NATO leaders meeting at the Hague this week, where most members have agreed to commit to a sharp rise in defence spending. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe.
