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Daily wrap up 23 June 2021

23 Jun 2021 06:26 PM

The FTSE 100 is outperforming its Continental counterparts thanks to a strong performance from commodity stocks. A rally in copper and oil has lifted mining and energy stocks, so that has given the British index an edge over eurozone indices. It is worth noting that UK banks are showing respectable gains too. By and large, the latest manufacturing and services data from France and Germany were well received but sentiment in mainland Europe is a little downbeat, this might be down to the fact that the DAX 30 and the CAC 40 have been relatively strong recently, whereas the FTSE 100 lagged behind.

Britain’s services sector showed a slight cooling in growth as the PMI reading dipped from 62.9 to 61.7 – which is still a very robust reading. It was a similar situation with the manufacturing data. Tomorrow, the Bank of England will reveal their interest rate decision. No change is expected with respect to monetary policy, but dealers will be focused on the voting break down with respect to the stimulus package. At the last meeting, one of the nine members voted in favour of reducing the stimulus package. Now that UK CPI is 2.1%, its highest in two years, we might see more than one BoE member support plans to scale back the bond buying scheme.

High inflation is a little concerning, but things are far worse in that regard in the US, as the level is 5%. Even though, the cost of living in the US has jumped to its highest rate in over a decade, Jerome Powell, the head of the Fed, remains confident the rate will cool off in the medium term. Yesterday, the central banker was testifying in front of the House Select Committee about the economy’s recovery. Powell praised the rebound but cautioned the coronavirus crisis could still cause problems for the nation’s economic health. US stock markets are a little mixed too as the NASDAQ 100 hit a new all-time high, the S&P 500 is showing a small gain, while the Dow Jones is fractionally offside.

At the end of last week, gold fell to its lowest level in almost two months. Today, the metal extended the rebound that started on Monday, the weakness in the US dollar helped the commodity. Silver enjoyed a bullish move too. Oil hit a new 32 month high as the recovery story keeps assisting the market. Even though US oil stockpiles fell to their lowest level since March 2020, the energy still retreated in the wake of the update.

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