Market movers today

Today is a quiet day with US markets being closed due to Independence Day tomorrow. In the US, we will look out for the virus development.

We look forward to the final PMI services indices in Europe (the most interesting being the Swedish, Spanish and Italian ones).

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In Norway, we get unemployment data for June, where we expect a decline to 4.9%.

Besides that ECB’s Knot speaks at 14:00 CEST.

Selected market news

Non-farm payrolls surged in June with 4.8m jobs, the biggest increase on record and more than the 4m consensus. The May figure was also revised upwards. That said, employment is still lower than pre-coronavirus and the unemployment rate is still 11.1%; underemployment declined significantly but remains elevated at 18%. The job market is improving but there is still a long way back to normal. Only just over a third of the historic plunge in April has recovered.

We had more sighs of relief on European labour markets with the unemployment rate only ticking up by 0.1%-point to 7.4% in May, below the 7.7% consensus. A low participation rate still mitigates the impact on the unemployment rate, though, and the verdict on the labour market is still out. The worst of the impact may still be to come as firms generally remain in retrenchment mode according to business surveys, especially in manufacturing.

The German Bundestag formally ended the legal dispute initiated by the constitutional court verdict in early May yesterday. The vote was backed by a broad alliance. That means that the Bundesbank can continue to implement the PSPP programme, as widely expected.

In our new Euro Area Macro Monitor we argue that recovery signals are strengthening as most European economies have returned to business. Our Danske growth tracker remains in recession territory, but shows further signs of improvement during June, led both by financial and economic variables. We expect euro inflation to lose some of its stickiness, as the effects from Germany’s temporary VAT cut will weigh on core inflation for the remainder of this year.

The Chinese Caixin/Markit services PMI increased to 58.4 in June from 55.0 in May on the back of the easing of coronavirus-related lockdowns, the highest reading since 2010. This bodes well for Chinese consumer demand. A sub index shows that new export business also expanded for the first time since January, something we have yet to see in the manufacturing sector.

On the back of the strong jobs report and the uplifting Chinese figures, Asian shares are up this morning. MSCI’s broadest index of Asia-Pacific shares outside Japan and the Nikkei rose about 0.5%.

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