The markets are abuzz today as the Group of Seven summit is underway in the United Kingdom. World leaders have gathered in person for the first time in about two years, as Covid-19 necessitated that the previous meeting was held online.
Among the most anticipated outcomes from this meeting is more news about richer countries donating Covid-19 vaccines to nations that couldn’t afford them. The United States, the United Kingdom, and others have purchased way more doses than they needed, and with high vaccination rates already are expected to donate the surplus doses to poorer countries. This will help the world as a whole overcome the coronavirus pandemic, so any news in that regard will have a positive impact on market sentiment.
In terms of economic reports, today the United Kingdom published its data on the GDP through April. Both the 3-month average and the YoY GDP report met the forecasts exactly, showing that the UK economy is moving at the expected rate.
Somewhat less important, however, were the construction output, industrial and manufacturing production, which all failed to meet the forecasts, identifying potential weak areas in the economy of the United Kingdom.
Such reports are likely to draw more attention in the near future as investors begin to look for signs of Brexit damage to the economy, now that the coronavirus pandemic has faded somewhat as a source of worry for that part of the world.
Later today we also expect the preliminary Michigan consumer sentiment survey for June, an important indicator of how well the economy of the United States is doing. It’s particularly interesting at a time when inflation overshoots the targets but labor data continues to disappoint.
In other news, still coming out of the United States, there are indications that the US Congress might after all be able to forge ahead with Biden’s infrastructure plan. A bipartisan group of Senators have drawn a preliminary framework for the type of spending Biden proposed, though at a slightly lower amount than the President had suggested. Still, the spending bill will be worth over 1 trillion US dollars, which the government will gather without increasing taxes. That was one of the main points of contention between Republicans and Democrats. It is too early to consider it done at this point, but it is a positive sign that the two parties in Congress can cooperate on important issues.
Today all major US stock indices will likely trade flat. They were slightly higher yesterday despite the bigger increase in inflation than planned, but so far it seems investors are unimpressed, fully convinced that the Federal Reserve is still going to maintain the same monetary policy it has promised for a while.
On the cryptocurrency market the troubles of Bitcoin continue, as the Basel Committee on Banking Supervision classified it as a very risky asset, or 1,250% risk. This appears to be a step towards regulating Bitcoin, or at least treating it like a formal asset, but the extremely high risk weight it carries is likely going to discourage any serious interest into it by banks and other financial institutions.
