European stock markets soften despite boom in economic activity and deluge of data in the United States

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After hitting new records earlier in the week, European stock markets were down slightly on Thursday as investors digest bullish European PMIs and cautiously consider a deluge of data in the United States.

Britain’s services sector saw the biggest increase in activity in 24 years in May, as foreclosure restrictions continued to ease and customer-facing parts of the economy returned to action. Services PMI stood at 62.9, up from 60.7 in April and ahead of the preliminary reading of 62.0. This is the highest level observed since May 1997.

Data indicates the UK economy is seeing a surge in activity as foreclosure rules have eased on pent-up demand. This pace of expansion is unlikely to be sustained, but it is certainly giving the economy a good start.

The data comes after the OECD revised its economic forecast for UK growth upward to 7.3%. The UK is expected to grow faster than any major economy this year, despite contracting by almost 10% in 2020, the worst contraction among major economies.

European PMI figures are also optimistic. European trade activity increased in May as foreclosure restrictions began to lift. Life has been pumped back into the dominant service sector of economies, reflecting equally strong data for the manufacturing sector earlier in the week. Manufacturing activity hit a record high in May.

As the vaccination program in the region accelerated and the third wave of Covid passed, restrictions began to ease. The composite PMI index, a good indicator of economic health, reached 57.1 from 53.8 in April.

U.S. futures point to a softer start as investors wait for a plethora of data, which could provide further clues about the health of the U.S. labor market and shed light on what to expect from the non-payroll report. agriculture of tomorrow.

FX – The dollar soars

The US dollar is higher but remains around its five-month lows, reflecting the Fed’s ultra-easy policy. However, some investors have grown increasingly concerned that a strong economic rebound and higher inflation could force the Fed’s hand sooner. Yesterday, the Fed’s Beige Book indicated that the pace of the US economic recovery has accelerated over the past two months, fueling concerns about mounting price pressures. The Fed’s Patrick Harker has said the Fed should start talks on tapping it, but a lot depends on tomorrow’s jobs data, especially after April’s surprisingly weak report.

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