Next week in global markets, the Sintra Conference of the European Central Bank (ECB), which will be attended by the new chairman of the Fed, US employment data, euro zone inflation data, developments in British politics and technology companies will be closely followed.
1. IS GOOD EMPLOYMENT BAD NEWS?
While rumors are increasing about whether the Fed will raise interest rates this year, the US non-farm employment data to be announced next week will be the focus of the markets.
Since Friday is the US Independence Day holiday, June non-farm employment data will be announced on Thursday.
After May data showed a third straight month of strong employment growth, markets may be more worried about an overly strong number showing how resilient the economy is rather than weak data.
The Fed’s adoption of a pro-tightening tone at its meeting in June showed that officials were fully focused on keeping inflation under control.
Traders expect the Fed, led by Kevin Warsh, to make its first interest rate increase in September.
2. SINTRA MEETING OF OLD FRIENDS
The European Central Bank (ECB) will host Kevin Warsh at the central banking conference to be held in the town of Sintra, Portugal.
Participants will try to get clues about how Warsh will manage the Fed and how proactively he will act in a period when global stability is disrupted.
Warsh, who took a stance in favor of monetary easing during his candidacy for the Fed Presidency, made it clear in his first press conference after taking office that he took the fight against inflation extremely seriously.
Following Warsh’s message, bond traders have already started pricing in an interest rate increase by the end of the year.
ECB President Christine Lagarde will also speak in Sintra.
On the other hand, June euro zone inflation data to be announced next Wednesday may cause the ECB to reconsider the idea of an interest rate increase in the short term.
3. ARTIFICIAL INTELLIGENCE MADNESS AND WARS: A TURBULENT FIRST HALF IS BEING LEFT BEHIND
Markets are preparing to leave behind an eventful six months marked by the tension caused by the USA in Venezuela, Greenland and Iran and the unstoppable rise of artificial intelligence stocks.
This rise, led by the artificial intelligence sector, enabled the total value of global stocks to increase by $7 trillion by the end of 2025.
Moreover, this rise occurred despite the huge loss of $ 9 trillion in March, when the Iran war increased oil prices to $ 120 per barrel and dashed hopes for a global interest rate cut.
During this period, the South Korean stock market recorded a tremendous rise of 100 percent, and Elon Musk’s space and aviation company SpaceX went public. On the other hand, the shares of giant technology companies known as the “Magnificent Seven” lost value, US bonds remained flat, and gold lost its former shine.
It looks like the second half of the year will be at least as active as the first. While the UK’s bond market, which is on edge, awaits the new prime minister, foreign exchange traders continue to be cautious about the yen intervention. On the other hand, while the Fed’s tightening stance continues, the markets are trying to take a position against President Donald Trump’s US midterm election strategy.
4. NEW PRIME MINISTER IN ENGLAND
It has been 10 years since the Brexit referendum, which resulted in the UK leaving the European Union (EU). After Keir Starmer’s resignation as prime minister, Andy Burnham is expected to become England’s seventh prime minister in the last 10 years.
Starmer announced last week that he would resign from this post, which he held for two years, after his popularity hit rock bottom both across the country and within the ruling Labor Party.
Andy Burnham, the most likely name to replace Starmer, is expected to make a speech next Monday.
Former Greater Manchester Mayor Burnham, who earned the nickname “King of the North” for his leadership during the coronavirus pandemic, is known as a more left-leaning figure compared to Starmer.
Burnham advocates the nationalization of strategic sectors and the UK’s rejoining the EU. In this regard, who will be appointed as the head of the economic management will be of great importance for the future of the country’s economy and financial markets.
5. CHIP SHARES IN ASIA
Shares of Asian chip manufacturing companies continue to remain on the agenda, especially due to the increasing volatility in the South Korean, Taiwanese and Japanese stock markets.
Apple’s announcement that it has increased the prices of iPad and MacBook reveals the side effects of the rapidly increasing demand for chips.
Investors are looking for a new catalyst to move the market after index provider MSCI’s decision not to include South Korea on its watch list for promotion to developed markets status.
In this regard, some economic data such as South Korea’s monthly manufacturing and export figures, which will be announced next Wednesday, were focused on. These data, which will take the pulse of global demand, will be closely monitored following the strong export figures from Taiwan, which, however, fall short of much higher expectations.
Additionally, Japan’s leading purchasing managers’ index (PMI) data shows companies continue to stockpile products to avoid supply chain disruptions and new orders are still rising across Asia. This indicates that Asia is starting to shake off the negative effects of the Iran war.
On the other hand, memory chip manufacturer SK Hynix will start investor tours ahead of its secondary public offering on the US stock exchanges on July 10, aiming to raise $ 29.4 billion.
