Global Markets Update – Monday 7 June 2021

Corporate Tax

The G7 countries of the US, Japan, Germany, the UK, France, Italy and Canada reached accord on global minimum corporate tax of at least 15%. The agreement will stop companies shifting profits to low tax jurisdictions and ensure the largest multinationals pay more tax where they operate.


The FTSE 100 rose 0.5% over the week. While large-cap stocks remained below previous peaks, the mid-cap FTSE 250 touched a record high during the week.

Airline stocks and travel companies were hit by news that no new countries had been added to the UK’s quarantine-free travel “green list in the latest travel review, with Portugal moved from green to amber status.

The final reading of the IHS Markit/CIPS UK composite purchasing managers’ index was revised higher to 62.9 in May 2021, from a preliminary estimate of 62.0 and the steepest rate of expansion since records began in January 1998. Services sector activity expanded at the fastest pace in 24 years while construction rose to a seven-year high. While manufacturing activity was revised slightly lower to 65.6 in May, it remained at a record high, with new orders rising at the quickest pace in the near three-decade survey history. Overall, the pace of job creation was the highest since June 2014.


The S&P 500 gained 0.3% over the week.

The Federal Reserve said that it would start selling the corporate bonds that it bought through its Secondary Market Corporate Credit Facility, aimed at stabilising the financial system last year.

The Biden administration announced a ban on US entities from investing in dozens of Chinese defence and surveillance technology companies.

Non-farm payrolls rose by 559,000 in May, below forecasts of 650,000, but a significant jump on the upwardly revised figure of 278,000 jobs posted in April. The unemployment rate slipped to 5.8%, the lowest rate since March 2020. The data helped to ease concerns that the US economy was overheating.

The ISM manufacturing purchasing managers’ index (PMI) rose to a stronger-than-expected 61.2 in May compared to 60.7 in April. The ISM non-manufacturing PMI increased to a record high of 64 in May from 62.7 in April.

US factory orders shrank 0.6% over the month of April, the first decline in 12 months.


The FTSEurofirst 300 rose 0.6% over the week. The EuroStoxx 600 ended the week at a fresh record high, as did Germany’s DAX.

The IHS Markit eurozone composite purchasing managers’ index was revised higher to 57.1 in May of 2021 from a preliminary of 56.9, pointing to the strongest growth in private sector activity since February of 2018. Services sector growth hit a three-year high, while manufacturing activity reached a fresh record high of 63.1.

Eurozone inflation rose to 2.0% year on year in May, up from a rate of 1.6% in April and surpassing the European Central Bank’s target range for the first time in two years. A 13.1% year-on-year rise in eurozone energy prices was the main factor behind the jump in the inflation rate.  Core inflation, which excludes food and energy, rose to 0.9% in May from 0.7% in April.

Eurozone producer prices jumped 7.6% from a year earlier in April, accelerating from a 4.3% percent advance in the previous month. This marked the highest producer inflation since September 2008.

Italy’s economy expanded 0.1% in the first quarter of 2021, meaning the country narrowly avoided falling into recession.

German inflation rose to 2.4% in May, its highest rate in more than two years.


The Nikkei 225 slid 0.6% over the week.

Pacific Basin

Australia’s economy grew 1.8% in the first quarter, thanks to a rebound in business investment and surging iron ore exports. The economy has now fully recovered from the pandemic, being 0.8% larger than it was before coronavirus was first detected in China in December 2019.

The Caixin China manufacturing purchasing managers’ index reached a five-month high of 52.0 in May. The PMI data also showed there were mounting cost pressures for manufacturers with input cost inflation hit its highest since December 2016 due to higher raw material costs.

Emerging Markets

Brazil’s economy expanded 1.2% over the first quarter, taking the year-on-year growth rate to 1.0%. The faster-than-expected first-quarter growth rate, which was due to a booming agricultural sector, an uptick in fixed investment and looser sanitary restriction, meant that economic output has now regained pre-pandemic levels.

India’s economy expanded 1.6% year on year in the first quarter of 2021. However, the country was subsequently battered by a second wave of coronavirus infections that started in April, with the composite purchasing managers’ index falling back below the 50 level that separates expansion from contraction in May.


The yield on the 10-year US Treasury bond closed the week at 1.55%, falling back below 1.6% as US job growth missed forecasts, while the 10-year German Bund yield ended at -0.21%.


The People’s Bank of China will force lenders to hold more foreign currency, indicating that it wishes to rein in the renminbi’s gains after it touched a three-year high against the US dollar last week.


Brent crude reached an intraday peak of $71.66 a barrel, its highest level since May 2019 as OPEC and its allies stuck to its plan to gradually release more barrels into the market.

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Image by Bruno /Germany from Pixabay