World Week Ahead: Fed minutes and policy report

Monday 3rd July 2017

Minutes from the US Federal Reserve’s June meeting, released on Wednesday, as well as the Fed’s monetary policy report to Congress, slated for Friday, will form a key focus as investors try to gauge the outlook for inflation.

Several US policy makers are scheduled to speak as well, with James Bullard on tap today, followed by John Williams, Jerome Powell and Stanley Fischer on Thursday.

Also firmly on the radar are the latest US jobs data with the ADP employment report and weekly jobless claims due on Thursday and the government's nonfarm payrolls data on Friday.

Other US economic reports due this week include motor vehicle sales, ISM manufacturing index, and construction spending, due today; factory orders, due Wednesday; as well as international trade, PMI services index, and ISM non-manufacturing index, due Thursday.

US financial markets will be closed on Tuesday for the July 4 holiday.

Last week, the Dow Jones Industrial Average fell 0.2 percent, the Standard & Poor’s 500 Index declined 0.6 percent, while the Nasdaq Composite Index dropped 2 percent.

US Treasuries declined, lifting yields, as central bankers in the US, the UK, Canada and the eurozone all signalled a stance towards raising interest rates.

As Wall Street remains near record highs, some see upward momentum fading. Others remain bullish.

“Wall Street continues to be unenthusiastic regarding the market,” Laszlo Birinyi wrote to his clients this week, Bloomberg reported. “New highs are generally greeted with a yawn. Especially encouraging is the fact that investors have cash.”

“As the year proceeds, we are actually feeling better about the market,” Birinyi noted.

On Friday the Dow closed higher, led by a rally in Nike shares. The stock jumped 11 percent after the company offered an outlook that bettered expectations.

"I’ve never felt as energised by what we have from innovation coming into the pipeline,” Nike chief executive officer Mark Parker said on a conference call, Bloomberg reported. “That’s why we’re so confident.”

Shares of rival Adidas benefitted, closing 2.7 percent higher in Frankfurt.

Meanwhile, data-sharing business Dropbox is seeking to hire underwriters for an initial public offering that could come later this year, which would make it the biggest US technology company to go public since Snap, Reuters reported on Saturday, citing people familiar with the matter.

Dropbox will begin interviewing investment banks in the coming weeks, the sources, who asked not to be named because the deliberations are private, told Reuters. Dropbox declined to comment.

In Europe, the Stoxx 600 Index slid 0.3 percent last Friday. That brought its decline for the week to 2.1 percent.

Shares of Bayer dropped, closing 3.7 percent weaker in Frankfurt, after the company warned it will downgrade its fiscal 2017 earnings and sales forecast because of its Brazilian crop science business.

“At the end of the harvest season in Brazil, regular stocktaking revealed an unexpectedly high channel inventory level of crop protection products,” Bayer said in a statement, adding that full-year earnings before interest, taxes, depreciation and amortisation before special items will be lowered by between 300 million euros and 400 million euros as a result.

(BusinessDesk)

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