For investors on both sides of the Atlantic, a thoroughly satisfactory trading week could be coming to an end. In particular, the prospect of falling capital market interest rates in the United States is likely to have rekindled risk appetite. In this context, the focus towards the end of the week should be on the official US labor market report. The French election should also be kept in mind.
DAX 40 Chart
Source: Tradingview
German inflation continues to fall - US economic data signal further slowdown
The first estimates of the German inflation rate came as a surprise on Monday, coming in at 2.2%, which was lower than previously expected (2.3%) after 2.4% in May.
At 48.5 points, the ISM index for the manufacturing industry in the USA failed to meet expectations (49.1 points).
According to initial forecasts, core inflation in the eurozone rose again slightly in June (2.9%). A rise of just 2.8% was expected in advance.
The words of Fed Chairman Jerome Powell at the central bank meeting in Sintra, Portugal, provided a strong boost. In his opinion, the USA is back on a "disinflationary path".
In the middle of the week, the ADP data signaled weaker job creation outside of agriculture for June. With a total of 150,000 new jobs, the figure was well below forecasts (160,000).
The ISM index for the non-manufacturing sector also signaled a further economic slowdown.
Fed minutes give no clear indications - time for interest rate cut has not yet come
The Fed minutes published late on Wednesday evening showed that the Fed still considers its tight monetary policy to be justified in the fight against inflation. Price pressure would ease and the economy would cool down. The time has not yet come to cut interest rates, it said.
After the stock exchange doors on Wall Street remained closed on Thursday due to the Independence Day holiday, trading in Germany was also relatively modest.
US labor market data likely to decide the weal and woe - economists expect a slump
This Friday, however, attention is likely to turn to the US jobs report (Non-Farm Payrolls) at 14:30. Economists expect an increase in jobs of 190,000 units, after 272,000 new jobs in May. The unemployment rate is expected to come in at 4.0%.
Investors should continue to focus on the French election, which is likely to be decided in the second round of voting next Sunday.
