European stocks fall after French President Emmanuel Macron’s surprise decision to call Parliamentary elections he is forecast to lose. We preview the Fed’s decision this week, and look out to US inflation data
In our bonus deep dive interview, ANZ New Zealand Chief Economist Sharon Zollner talks about why she sees the Reserve Bank of New Zealand cutting in February next year, rather than May.
5 things to know:
European markets weakened overnight after French President Emmanuel Macron called a snap election, but the main focus on global markets this week is on Federal Open Market Committee rate decision on Thursday morning Australia time. ANZ Senior Rates Strategist Jack Chambers says the key forecast to watch out for is the Fed’s famous ‘dot plot’.
The last big pieces of data ahead of the FOMC meeting were for the US labour market. Non-farm payrolls jumped 272,000 in May, stronger than expectations for 180,000. But the unemployment rate also ticked up to 4%. ANZ Head of G3 Economics Brian Martin says the jobs growth was concentrated in health, education and government - indicating deceleration in private sector employment.
US demand helped drive China’s exports up 7.6% in May from a year ago - higher than market expectations. ANZ Senior China Strategist Zhaopeng Xing says that’s due to front-loading ahead of Biden administration tariff hikes on the 1st of August. Strength was also underpinned by a global manufacturing recovery.
Amid India’s post-election developments, the Reserve Bank of India held its policy rate at 6.5%. The RBI increased its growth outlook for the year to March 2025 slightly, but maintained its CPI forecast. ANZ Economist Dhiraj Nim says while the RBI maintained a hawkish stance, there was growing dissent with that.
The other big focus for global financial markets is US CPI inflation data for May due tomorrow night. Jack is looking for around 0.25%, down from 0.3% in the first quarter.
Cheers
Bernard
PS: Catch you on tomorrow with a look ahead to CPI numbers out in both China and India and a look ahead to Australian jobs data.
