Markets Weekly

28 June 2019

3 minute read

Week ahead

July begins with a shower of key macro data and as the G20 summit unfolds, leaving investors searching for clues on the economic outlook.

Next week the focus is primarily on purchasing managers’ index (PMI) surveys, with major economies releasing final manufacturing and services PMIs for June. In the US, preliminary readings for the month will likely continue to be on a softening path due to waning production volumes, with manufacturing activity weaker than services. The UK is expected to show a similar weakening pattern after May’s surveys recorded a dip in manufacturing courtesy of Brexit uncertainty, partly offset by a modest increase in services activity.

Data out of the eurozone will test the recent upward trend in PMIs, as services remain resilient and manufacturing slightly improved in May despite still contracting. Finally, trade tensions will likely translate into soft June PMIs out of China although, unlike services activity, manufacturing surprisingly held up last month.

The European Central Bank and the Bank of England have recently lowered their growth forecasts but May’s data on broad money growth in the eurozone and the UK is expected to remain healthy and underpin modest output expansion. Markets also await readings on the labour markets from both sides of the Atlantic. The consensus is for unemployment rates in the eurozone (May) and the US (June) to stay around historical lows, while US non-farm payrolls and average hourly earnings growth for June should stabilise after a weak May.

Chart of the week

Golden times

After its best weekly performance in over three years, gold hit a six-year high on 25 June of $1,430 an ounce. Demand for the precious metal (especially in the short run) is wide-ranging from diversifying portfolios, increasing demand for jewellery and in the case of the recent rise, a flight to safety during uncertain times.

Unsurprisingly, the rise came at a time of escalating tensions between the US and Iran and the uncertainty of the G20 summit, where President Trump and President Xi are scheduled to meet.

Gold is a clear winner in today’s uncertain and low-yield environment. Furthermore, leading central banks are turning more dovish and many real rates are deeper in negative territory. Although we think gold will remain an important diversifier, the price will fail to keep its winning streak for long and will soon stabilise.

Chart of the week


Ageing population: the golden age of silver spending

How can investors profit from the expected doubling in consumers aged over 65 between 2015 and 2040?

Ageing hands

Outlook for oil prices

How should investors position themselves for prospects in the oil market?

Previous editions of Markets Weekly

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