Indices futures in the US and Europe were trading without direction, while Asian markets closed higher after US President Joe Biden signed the suspension of the $31.4tn US government debt cap into law, avoiding what would have been the first default in US history. Oil prices rose over 2% after Saudi Arabia announced it would cut one million barrels per day in oil production from July. Expectations for May PMI data from the Institute for Supply Management and S&P Global were also driving the market. The Brazilian government is expected to launch its package of incentives for the automotive industry today, while the central bank is due to release its Focus report.
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Indices futures in the United States and Europe trade without direction, while Asian markets closed higher on Monday (5), after US President Joe Biden signed into law the suspension of the US$ 31 cap .4 trillion for US government debt, avoiding what would have been the first default in US history.
Oil prices rose more than 2%, reflecting the announcement of the Saudi Arabia to cut 1 million barrels per day (bpd) in its oil production starting in July. The news comes after a meeting of OPEC and its allies, during which the group decided to maintain existing production targets for 2023.
In indicators, the market is awaiting May PMI data from the Institute for Supply Management and S&P Global on Monday, as well as factory orders and durable goods for April.
Ibovespa today: follow what moves the Dollar, the Interest and the Stock Market Live
Around here, the political agenda has a lot to deal with in the coming days. In the Senate, the fiscal framework must still go through the Economic Affairs Commission (CAE). Parliamentarians are evaluating changes to the text, but they want to avoid a new vote in the Chamber.
The tax reform rapporteur, Deputy Aguinaldo Ribeiro (PP-PB), confirmed that he will present the reform report next Tuesday (6). There is also an expectation that the government will officially announce the program to reduce the prices of popular cars.
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1. World Scholarships
USA
US index futures traded flat on Monday morning after a broad rally sent the S&P 500 to its best week since March and the highest level since August.
Meanwhile, US Treasuries rise as investors consider what could be next for interest rates and weigh key economic data that could affect the Federal Reserve’s next policy moves.
Uncertainty about the Fed’s monetary pause at the June meeting has been extended, due to speeches by Fed officials and economic data reflecting resilience in the labor market.
See how the futures markets performed:
- Dow Jones Futures (US), +0.09%
- S&P 500 Futures (US), -0.02%
- Nasdaq Futures (US), -0.25%
Asia
Asian markets closed higher after US President Joe Biden signed into law a debt ceiling law that allowed the US to avoid defaulting on its financial obligations over the weekend.
In Japan, the Nikkei 225 rose 2.2%, topping 32,000 points for the first time since 1990.
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On the economic data front, China’s Purchasing Managers’ Index (PMI) hit 57.1 in May, hitting the second-highest rate since November 2020.
Japan’s Services PMI came in at 55.9, surpassing the previous record of 55.4 set last month and extending its streak to six straight months of accelerated expansion.
Singapore’s retail sales grew 3.6% year-on-year in April, down slightly from the 4.5% recorded in March.
- Shanghai SE (China), +0.07%
- Nikkei (Japan), +2.20%
- Hang Seng Index (Hong Kong), +0.84%
- Kospi (South Korea), +0.54%
- ASX 200 (Australia), +1.00%
Europe
European markets were mixed as investors digested the US debt ceiling deal and euro zone inflation data.
Oil and gas stocks led the gains, rising 1% after Saudi Arabia announced voluntary cuts in its production on Sunday.
European investors are still weighing the impact of inflation data on Thursday, which showed euro zone inflation has fallen to its lowest level since February 2022.
- FTSE 100 (UK), +0.56%
- DAX (Germany), +0.05%
- CAC 40 (France), -0.03%
- FTSE MIB (Italy), -0.27%
- STOXX 600, +0.08%
raw Materials
Oil prices are trading in positive territory after Saudi Arabia promised more voluntary production cuts.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) reached an agreement last Sunday (4) to extend production cuts until 2024 and grant the UAE a higher quota next year, according to a group statement.
Iron ore prices in China rise, with expectations that the Asian giant may announce, in the coming days, a new package to boost the real estate market.
- WTI Oil, +2.36%, at $73.43 a barrel
- Brent oil, +2.22%, at $77.82 a barrel
- Iron ore traded on the Dalian exchange was up 2.15% at 759.00 yuan, equivalent to US$106.55.
Bitcoin
- Bitcoin, -1.50% to $26,809.67 (24 hours ago)
2. Hours
The week is shorter with the Christian festival of Corpus Christi, next Thursday (8). Inflation for May measured by the Expanded Consumer Price Index (IPCA) will be released before the holiday, on Wednesday (7). Itaú forecasts a slowdown to 0.31% from 0.61% in April, supported by gasoline and food prices. Thus, the annual rate would be 4%.
The Central Bank’s Focus report for this Monday (5) should also receive special attention. After the Brazilian Gross Domestic Product (GDP) rose 1.9% in the third quarter, above market expectations, economists may revise their economic growth projections for this year and next.
May IPCA, Senate fiscal framework and Chinese economy data: what to watch this week
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In the United States, data for industrial orders (Monday), the trade balance (Wednesday) and weekly claims for unemployment benefits (Thursday) will be released.
But investors should also keep a close eye on the Composite and Services Purchasing Managers’ Index (PMI), due for release on Tuesday. By the way, PMIs are also on the indicator agenda for Europe and Asia.
Brazil
8:25 a.m.: Focus Bulletin
10:00 a.m.: Services PMI
10:30 am: Fernando Haddad, Minister of Economy, meets with Fabiano Silva dos Santos – President of Correos Agenda: International Remittances
11:30: Haddad meets with Paulo Teixeira – Minister of Agrarian Development and Family Farming (MDA)
12:00: Diogo Guillén, BC Director of Economic Policy, speaks at a Bradesco BBI event
12:30: Haddad has a meeting with Bruno Le Maire – Minister of Economy, Finance and Industrial and Digital Sovereignty of France
2:30 p.m.: Campos Neto gives a lecture at the Guaxupé Regional Coffee Growers Cooperative (Cooxupé)
USA
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10:45: PMI
11 a.m.: ISM PMI
3. Economic news
Government should launch incentive package for the automotive industry this Monday
The government of President Luiz Inácio Lula da Silva (PT) should launch this Monday its package of incentives for the automotive industry. The measures were announced at the end of May and federal administration departments have been scrutinizing their details in recent days.
The package provides for federal tax cuts for vehicles costing up to R$120,000, to reduce the price between 1.5% and 10.96%. The size of the reduction will depend on 3 variables: social, environmental and industrial (the cheaper, less polluting and with the greater number of pieces produced in Brazil, the greater the discount).
The government must advance the diesel tax, which was scheduled for January of next year, to pay for the stimulus program for the sale of new cars. The proposal was suggested by the Minister of Finance, Fernando Haddad.
4. Political news
Congress “in no way” can harm education “already weakened” in Brazil, says framework rapporteur
The rapporteur of the proposal for the new fiscal framework in the Senate, Senator Omar Aziz (PSD-AM) reinforced this Sunday the 4th that there are three main points of discussion on the bill in the Chamber: the maintenance or elimination of expenses of the Basic Education Maintenance and Development Fund (Fundeb) of the spending limit in the new norm, the change in the correction of the Constitutional Fund of the Federal District and the wording of article 15, which opens the way for the Union to increase its spending next year.
Despite not announcing whether he will change the text that came out of the Chamber in relation to these issues, Aziz said in an interview with CNN Brazil that he will analyze the demands and defended that Congress “in no way” harms “already weakened” education. in Brazil.
5. Corporate Radar
CVC (CVCB3)
CVC (CVCB3) communicated in a relevant fact that it entered into an investment contract with GJP Fundo de Investimento em Ações, owned by the founder and former controller of the company Guilherme Paulus, with the intervention of investment funds managed by Opportunity, for which Paulus committed to invest R$ 75 million in the eventual and future public offering of primary distribution of shares.
The company also announced that the board of directors chose Fabio Martinelli Godinho for the post of general manager, with effect from last Saturday (3).
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Petrobras (PETR3;PETR4)
The Court of the Administrative Council for Economic Defense (Cade) judges next Wednesday (7) the sale of the Petrobras refinery in Ceará, Lubnor (Lubricants and Petroleum Derivatives of the Northeast), to Grepar Participações.
Leader in the production of asphalt in the country, the unit uses heavy crude oil produced in Espírito Santo and Ceará, with the capacity to process 8,000 barrels per day.
The business was closed with Grepar approximately a year ago, for US$34 million, with a payment of US$3.4 million in cash.
(With Estadão, Reuters and Agência Brasil)
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