Daily Market Commentary 1st July 2022

Global markets closed out Q2 on a very negative note. European and US equities plunged again overnight, from recessionary fears, due to Central Bank actions taken to combat rampant inflation. French CPI jumped to 5.8%, from 5.2%, while PPI jumped 27.3%. The French number is particularly worrying, as they have not been as hard hit by the energy crises, as other European nations. PPI soared across European nations, with Belgium (40.3%), Italy (34.6%), Hungary (32.3%), while Portugal’s CPI jumped to 8.7%. German Unemployment spiked to 5.3%, while European Bond Yields crashed. Equities and Bond Yields crashing at the same time leaves no place to hide, not to mention the utter collapse of the Crypto-Currency markets.

The fall in Bond yields and commodity prices easing, are a reflection of demand and the recession not yet statistically verified. The EUR pushed back to 1.0480, while the GBP inched back up to 1.2180, assured of further vulnerabilities. NZ Business Confidence collapsed (minus 62.6), even exceeding the fall in Consumer Confidence and confirming the dire economic situation NZ is in. The currency fall back to 0.6200, but bounced in overnight markets due to a weaker reserve, while the AUD regained 0.6900.

Local markets will look at Australian Manufacturing PMI, Japan’s Tankan report and NZ Consumer Confidence data. These number are overshadowed by inflation and growth numbers, globally. The Fed’s favourite measure of inflation, the PCE, came in at record equalling highs of 6.3%.