United States:
The week ending June 3 had disappointing data releases as the labour market highlighted further weakness in the US economy. The week started with the consumer confidence index report, which showed a fall from 65.4 to 60.8. This was a miss from the forecast which expected a slight improvement in the index. As the week progressed, there was no improvement with the economic data. The ADP Employment change report revealed that non-farm private employment increased by a mere 38,000 jobs.
This was met with shock and disappointment in the market as the expectation was for 175,000 additions in May, just short of the 179,000 jobs added in April. The much anticipated labor report released at the end of the week further weighed down the market. The federal report revealed that for the month of May non-farm payrolls increased by 54,000. This was much lower than consensus forecast of 165,000 and even lower than April's additions of 244,000. The jobless rate also increased to 9.1 per cent from 9.0 per cent. The forecast was for a fall by 10 basis points.
The ISM manufacturing index also released that week fell to 53.5 from 60.4. This revealed that manufacturing grew at its slowest pace in over a year. The ISM non-manufacturing index showed some improvement when released on June 3, but was overshadowed by the weak labour report. The index increased from 52.8 in April to 54.6 in May. For the week June 6 to 10, economic data releases will be few, with the most significant being the trade balance.
The slew of poor economic data within the last couple weeks has pointed to a slow in pace of the US recovery. US treasuries reflect this sentiment with the ten-year yield dropping below 3.00 per cent last week as demand for them increased. With QE2 due to expire at the end of this month and a slowdown in the pace of growth, many eyes will be on the Fed when it releases its next statement on June 23.
Europe:
The European Central Bank is expected to maintain its policy rate at 1.25 per cent at its next meeting on June 9, 2011. The Euro-zone's manufacturing PMI declined from 58 in April to 54.6 in May while the euro-area composite PMI of manufacturing and services industries declined from 57.8 in April to 55.8 in May. Turkey's inflation rate accelerated to 7.2 per cent in May. Germany's jobless rate fell to 7 per cent in May, the lowest since reported rate since 1991.
Provisional figures indicate economic growth for the first quarter of 2011 in the United Kingdom at 1.8 per cent (y/y). Poland's economy expanded 4.4 per cent (y/y) in the first quarter of 2011 after growing 4.5 per cent in the fourth quarter of 2010. Authorities in Poland have indicated that they will soon end their policy of interest rate increases that was implemented to control inflationary pressures in the economy.
Peru:
Peru held its presidential run-off elections on June 5. Preliminary results give Ollanta Humala a win over opposing candidate Keiko Fujimori. With 90 per cent of the ballots counted Humala secured 51.3 per cent of the votes while Fujimori earned 48.7 per cent. The build up to the election was a close contest as many analysts were unable to declare an outright winner. Humala is an advocate for the poor and aims to bridge the gap between the rich and poor within Peru. His campaign proposals included additional taxes on mining profits, increased royalties and prioritising of natural gas production for domestic consumption.
Credit Ratings:
Bahrain: Downgraded by Moody's Investor Services from A3 to Baa1 on May 26, 2011, as a result of unrest and the significant deterioration in the country's political environment.
Colombia: Upgraded by Moody's Investor Services from Ba1 to Baa3 on May 31, 2011. The rating agency cited the government's ability to cope with internal and external shocks and its ability to utilises revenues derived from the commodity boom.
Panama: Upgraded by Fitch Ratings from BBB- to BBB on June 6, 2011. The upgrade reflects Panama's prospects for economic expansion and improved government debt structure.
Greece: Downgraded by Moody's Investor Services from B1 to Caa1 on June 1, 2011. The ratings agency stated that it believed there was a 50 per cent chance of Greece defaulting on its debt.
Weekly International Equity Watch
US stocks fall on weak economic data
The S&P 500 fell 2.32 per cent during the week ending June 3 dragged down by a fall in consumer confidence to 60.8 in May from a revised 66 in April, a drop in manufacturing activity and weak US jobs data. At a close of 1,300.16, the S&P recorded a year-to-date return of 3.38 per cent, down from 5.84 per cent seen the week before.
Low investor sentiment stemming from the weak jobs market is expected to continue this week given no major economic releases. A speech from Fed chairman Ben Bernanke on June 7 is expected to be the market highlight of the week. Like the S&P 500, the Dow Jones Industrial Average index fell by 2.3 per cent during the week to a close of 12,151.26 points while the Nasdaq fell by the same percentage to 2,732.78.
Euro-stocks fall in response to weak US data
The unexpected rise in the US unemployment rate and a slow expansion in Chinese manufacturing led to a 1.85 per cent decline in the Stoxx 600 index to 273.67. Raw material shares saw the largest drop among the 19 industry groups led by Rio Tinto Group and BHP Billiton Ltd which retreated by 3.7 per cent and 3.5 per cent, respectively.
Asian stocks continue to fall on concerns of a global recovery
Asian stocks followed a similar trend as the disappointing US economic reports took the spotlight from the optimism seen in the Eurozone that the debt crisis may be contained. The MSCI Asia-Pacific index declined by 0.24 per cent to 133.98, marking its fifth straight weekly decline.
T&T stock market
TTSE Composite Index continues its advance
The Composite Index increased slightly during the week ending June 3, rising by 0.31 per cent to a value of 929.19, as seven stocks advanced and 1 declined.
National Commercial Bank of Jamaica (NCBJ) was the weekly volume leader with 1,690,000 shares trading at a closing price of TT$1.80. National Enterprises Ltd (NEL) saw the largest price appreciation rising by 1.98 per cent during the week to a close of TT$13.41.
Prestige Holdings Ltd (PHL) saw the largest price decrease as its share price fell by 0.87 per cent during the week to a close of TT$5.70 with a total of 6,754 shares trading for the week. Year-to-date, the TTSE Composite Index is up 11.20 per cent.
The amendment to the calculation of the closing price was implemented this week and will result in the Volume Weighted Average Price (VWAP) being used as the method for determining the closing price for securities listed on the First Tier, Second Tier and Mutual Fund market.