European markets open to close after Wall Street snapped a losing streak

Germany’s ZEW Economic Sentiment fell to -14.7 in July from -8.5 in June, lower than the -10.5 forecast in a Reuters poll.

Across the broader eurozone, economic forecasts fell from -10 in June to -12.2 in July.

– Elliott Smith

The Office for National Statistics revealed on Tuesday that wages excluding bonuses in the UK grew at their fastest rate on record in the three months to May, rising 7.3% from the same period last year.

The country’s tight labor market showed signs of easing as the unemployment rate unexpectedly rose from 3.8% to 4% in the three months through April, while job vacancies continued to decline. The employment rate rose to 7.6% on the back of an increase in part-time employment.

The economic inactivity rate decreased from the previous quarter to 20.8%, continuing the recent downward trend.

Stuart Cole, chief macro economist at Equiti Capital, said the Bank of England would be satisfied with the decline in the number of connected employees and the increase in unemployment claims, which indicates that the labor market is finally starting to shed jobs.

However, he said the strength of the earnings numbers will continue to be “concerning” for policymakers, suggesting that monetary policy may need to tighten further in order to rein in core inflation.

“These figures show that workers are still able to secure huge wage increases despite the apparent cooling in the labor market as a whole, perhaps reflecting attempts by companies to prevent skilled workers from leaving, but also suggesting that the market downturn that the headline figures indicate “Maybe it’s not seen on Earth,” Cole said.

The Bank of England has repeatedly warned that high wage growth remains a major hindrance to its efforts to bring down inflation and today’s numbers will do nothing to convince it that the labor market is no longer brisk, leaving it likely to conclude that monetary policy needs to be tightened further.

Jack Kennedy, a UK economist already at the Employment Platform, suggested a slowdown in the one-month wage growth figure for May from 7.7% to 7.1%, and noted that April “was probably the peak of wage growth after that month’s 9.7% increase in the National Living Wage.” “

However, he agreed that the Bank of England’s Monetary Policy Committee would need to see evidence of moderating wage growth “sooner rather than later” to dissuade it from “other, possibly large” hikes in interest rates.

– Elliott Smith

European stocks opened in positive territory on Tuesday, trailing gains around the world after Wall Street snapped a three-day losing streak.

The pan-European Stoxx 600 index added 0.5% in early trade, with construction and materials stocks rising 1.4% to lead the gains as most major sectors and stock exchanges entered positive territory.

– Elliott Smith

Britain’s FTSE 100 is set to gain nearly 3 points to 7,277, Germany’s DAX is expected to gain about 35 points at 15,738, and France’s CAC 40 is expected to gain about 28 points to 7,172, according to IG data.

Stocks have risen strongly so far this year. But the impressive returns have some investors worried about the market’s ability to hang on to gains for the rest of 2023.

CNBC Pro polled 15 market strategists at investment banks and asset managers from July 3-7, asking them what they expect from the stock markets in the second half of this year. Respondents also shared their views on how investors position themselves and the most important market risks.

While some said they expected stocks to continue rising, others were more skeptical and suggested investors should prepare for a 10% drop in the S&P 500 by the end of the year.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Nomura economists said that the region’s major economies could begin to “decouple” from the global Fed-led tightening cycle due to different macroeconomic conditions in Asia.

“Our view of Asian central banks cutting interest rates ahead of the Fed in this cycle is based on fundamental differences between the Asian and US economies,” Nomura economists wrote in a note on Friday.

According to a real-time survey conducted by the Nomura research team, more than 32% of respondents said they expected the South Korean central bank to be the first to cut interest rates after China, followed by Indonesia, then the Philippines, and then India.

– Jihe Lee

China will expand two fiscal policies to support its real estate market until the end of 2024.

in notice, The People’s Bank of China referred to a 16-step guideline last November that was released to strengthen policy support for the housing sector. The country will now extend the relevant policies until the end of the year.

Xinhua reported The purpose of this step is to “direct financial institutions to continue postponing the repayment of loans to real estate institutions, while supporting financial support for real estate institutions to ensure the completion of housing projects.”

– Lim Hwi Ji