Japan’s Nikkei Index regained strength on Friday. It opened higher and closed the week at a one-week high. The stronger dollar also supported Nikkei.
On June 15, the day after the FOMC statement, most global markets traded with a negative tone.
The US ten-year yield fell to 2.1% after the weak US data report, US inflation showed a decline of 0.1%, and retail sales fell by 0.3% for May 2017.
In her post-meeting press conference, Janet Yellen warned that the Fed could implement its balance sheet unwinding process soon if the economy continues to perform as expected.
The US Dollar Index (USDX) touched a high of 103.81 on January 1, 2017, and has since lost ground as political and policy uncertainty dominated the US economic outlook.
On June 14, the FOMC raised the federal funds rate by 0.25% to 1.00–1.25%. The FOMC’s surprise announcement addressed its plans to unwind the Fed balance sheet later in 2017 if the economy performs according to its members’ expectations.
The UK Manufacturing PMI (purchasing managers’ index) improved to 56.7 in May, as compared to 57.3 in April, beating the market expectation of 56.5.
The US May jobs report indicated weak improvement in the US labor market.
The Japan Manufacturing PMI stood at 53.1 in May 2017, as compared to 52.7 in April, outperforming the preliminary market estimation of 52.0.
The Eurozone Manufacturing PMI stood at 57 in May 2017, as compared to 56.7 in April, which is in line with the preliminary estimation of 57.0.
The France Manufacturing PMI (purchasing managers’ index) improved to 53.8 in May 2017, as compared to 55.1 in April 2017,
The Germany Manufacturing PMI increased to 59.5 in May 2017, as compared to 58.2 in April, meeting the preliminary estimation of 59.4.
The May 2017 US Manufacturing PMI (purchasing managers’ index) report indicates a softer US business condition.
PMIs are important because they shed light on a country’s economic health and help investors identify short-term economic trends and market sentiment.
After starting on a weaker note, the United Kingdom’s FTSE 100 index fell in the first three trading days this week. On June 15, it opened the day lower.
The US Dollar Index started the week on a weaker note and fell for three consecutive trading days. It regained strength later on June 14.
The Fed increased interest rates by a quarter point on June 14. Although inflation missed the Fed’s expectations, interest rates rose to 1%–1.25%.
On June 15, the Shanghai Composite Index opened lower amid weaker sentiment and regained some strength as the day progressed.
China’s (FXI) economy posted remarkable GDP growth in 1Q17 amid concerns of high levels of debt and a decline in domestic demand.
A solid improvement in China’s (FXI) service sector in May 2017 provided a much-needed support, as its economy currently struggles with its manufacturing sector.