US

US stocks erased much of their previous gains on Thursday alone, amid concerns that the US economic impetus may be slowing down. In spite of the Thursday drawdown, US stocks still outperformed the other major equity markets over the past five days ending Thursday, with the S&P 500 and NASDAQ up 0.54% and 0.38% respectively. On the US data front, the labour market continued to improve, with a record number of 9.2 million job openings in May, reflecting further strengthening of the job market. However, the pace of expansion in the US service sector, reflecting service sector activity, was weaker than expected in June, raising concerns that the US economic growth momentum may have peaked, triggering a market correction. Longer-term inflation pressures have eased as the 30-year US Treasury yield, typically reflecting longer-term inflation expectations, fell to 1.85%, down 66 basis points from its high of 2.51% in March. The minutes of the June meeting of the US Federal Reserve showed that officials expect the timing of the tapering could be earlier, but remain divided on how to scale back purchases of mortgage-backed securities (MBS).

Global oil prices continue to rise, mainly due to concerns over the supply outlook as Saudi Arabia and the UAE failed to reach an agreement on increasing production. No announcement has been made regarding the next OPEC+ meeting, which may mean that production will probably stay unchanged in August, possibly resulting in a 'historic supply gap', and this has spurred a further rise in oil prices to near US$77 per barrel. The market is still closely monitoring oil price action. Next week, the US will release important data such as CPI and retail sales for June, and the Fed will also publish its latest economic beige book.

Europe

European stock markets have been weak recently, with the UK, French, and German equity indices down 1.33%, 2.40% and 1.17% respectively over the past 5 days ending Thursday. The ECB announced the results of its first strategy review since 2003, stating that a medium-term "symmetric" inflation target of 2% will be implemented from 22 July onwards, while allowing inflation to "moderately" exceed this level temporarily. ECB president Christine Lagarde said that the new inflation target does not preclude any potential policy tightening, which was unanimously agreed by central bank policymakers. On the other hand, the European Commission raised its economic growth forecast for the Eurozone from 4.3% to 4.8% this year, saying that the economy is "recovering strongly". Next week, the UK will release CPI data for June.

China

The investigation of DiDi has renewed regulatory concerns in China, and the sharp fall in China concept stocks weighed on the performance of the Hong Kong stock market. The Hang Seng Index was down 3.41% for the week, while the mainland stock market fared better, the CSI 300 Index was slightly lower by 0.23% for the week.  The freshly US-listed vehicles for hire leader DiDi is under investigation, with its share price falling by nearly 20% in a single day after its IPO, and its shares have been in a downward spiral since then, to the extent that US investors have taken it to court. It is reported that the Chinese government may tighten up the supervision of companies listing abroad. On the other hand, China's bond market was supported by the State Council's reintroduction of "timely RRR cuts", which saw the 10-year bond yield briefly falling below 3%. Next week, China will announce its GDP for the second quarter and important data on fixed investment, production and retail sales in June.

 US

US equities stayed in strong form, as concerns over the risk of rate hikes and tapering has temporarily faded, positive economic data further supported markets. Over the past 5 days ending Thursday, US markets went higher, the 3 major equity indices gained 1.06 – 1.28%, the S&P 500 Index in particular set new historic highs for 6 days in a row. Policy wise, the bipartisan infrastructure bill has hit another obstacle, as Republican senators warned that they could withdraw their support for the bipartisan deal if it was bundled with another Democratic bill. Economic data were great, initial jobless claims went below 400k again, hitting a new low since the start of the epidemic. ISM manufacturing PMI fell slightly short of market expectations, but remains in the expansionary zone, consumer confidence also hit a recent high, both highlighting the strength of the current economy. As for monetary policies, Philadelphia Fed Chairman Patrick Harker said the reduction in asset purchases should start within this year, joining in with the growing hawkish sentiment in the Fed. Next week, services PMI from both ISM and Markit will be released, investors might also want to keep an eye out for the latest employment data, while the Fed will release the June FOMC meeting minutes.

Europe

European equities had mixed performance amidst decent economic data, the UK and German equity indices gained 0.09 - 0.21% over the past 5 days ending Thursday, while French equities lost 1.17% over the same period. Although vaccinations programmes continued, COVID infections in the UK due to the Delta variant are on the rise, which could risk spreading it across the continent with the ongoing UEFA EURO 2020, potentially jeopardising the whole reopening process. Apart from the risk arising from the epidemic, Europe fundamentals remained on the bright side, with various employment, sentiment, and more importantly inflationary data staying on the positive side. The latest figure on inflation came in at 1.9%, which is slightly lower than the previous figure of 2.0%, relieving markets over inflation concerns, and indirectly guaranteeing that the current easy monetary policy can be extended. Next week, Europe will release a range of key economic data, including services PMIs and retails sales figures, while Germany will have further data on ZEW Survey Expectations and industrial production.

China

With a larger correction on Friday, Chinese equity markets underperformed, the CSI 300 index lost 3.03% over the week; Hong Kong markets also felt the impact, falling 1.98% over the past 5 trading days ending Friday. As for fundamentals, economic data in China was less positive than markets had hoped, with both the official PMIs and the Caixin manufacturing PMI lower than the previous reading. The Chinese Communist Party celebrated its 100th anniversary, marking the end of the first centenary, and moving on to the second centenary, which aims to transform China into a modern world power. Markets continued to pay attention to the offshore corporate bond markets, with the recently downgraded Evergrande and Huarong in focus. Next week, China will release more economic data, including Caixin services PMI, CPI, and PPI figures for June.