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On Friday, at the close of the stock market Dow Jones Index (US30) decreased by 0.55% (-0.56% for the week), S&P 500 (US500) lost 0.29% (-0.53% for the week). Nasdaq Technology Index (US100) closed negative by 0.13% on Friday (-0.43% for the week).

The US labor market added 209,000 jobs in June, while the unemployment rate fell to 3.6% from 3.7%. This number is slightly below economists' expectations of 225,000 jobs. It's also a slowdown from the previous month's reading, which was revised downward by 33,000 to 306,000. But overall, despite some cooling, the labor market remains resilient. The Fed is keeping a close eye on labor market indicators and is concerned that demand for workers will drive more robust wage growth and, in turn, inflation. Therefore, the Fed wants to see an increase in unemployment first to end the tightening cycle.

Another concern for the Fed today continues to be the strong growth shown by the US service sector, as reflected by the ISM Manufacturing PMI, which showed a strong side of the economy in June compared to May. This could keep the service sector relatively strong if the sector does not slow in the second half of the year.

Equity markets in Europe traded flat on Friday. German DAX (DE30) gained 0.48% (-3.61% for the week), French CAC 40 (FR40) added 0.42% on Friday (-4.09% for the week), Spanish IBEX 35 (ES35) decreased by 0.36% (-3.68% for the week), British FTSE 100 (UK100) closed negative by 0.32% (-3.65% for the week).

European Central Bank Vice President Luis de Guindos expressed some optimism that core inflation may peak. A decline in core price growth could lead to a potential pause in rate hikes. But the politician also added that incoming data will also guide the ECB. Yannis Stournaras, governor of the Bank of Greece and one of the ECB's most dovish policymakers, echoed this view Friday. European Central Bank President Christine Lagarde said Friday that the bank would not "stand idly by" if there were simultaneous increases in profits and wages, given persistently high inflation in the region.

On Sunday, French Central Bank governor François Villeroy de Galhau opposed a proposal to raise the European Central Bank's inflation target to 2%. Villeroy, who sits on the ECB's governing council, also said that interest rate hikes are close to the maximum and that rates will be held at elevated levels long enough for their impact on the economy to be felt.

Oil prices fell in Asian trading Monday as investors are cautious ahead of important US economic data on inflation this week, although expected crude supply cuts from Saudi Arabia and Russia will keep oil from falling.

Asian markets were mostly down last week. Japan's Nikkei 225 (JP225) decreased by 3.37% for the week, China's FTSE China A50 (CHA50) lost 2.19%, Hong Kong's Hang Seng (HK50) fell by 3.35%, and Australia's S&P/ASX 200 (AU200) was negative by 2.24%.

China's inflation data for June showed a decline. Over the last month, consumer prices declined by 0.2%, and the annual Consumer Price Index remained unchanged at 0.2%. The producer price index, which shows the rate of inflation between factories and plants, fell from minus 4.6% to minus 5.4%, adding to deflationary pressures. On the other hand, deflationary momentum from China may help offset service-driven inflation in developed countries over time.

• S&P 500 (F) (US500) 4,398.95  −12.64 (−0.29%)
• Dow Jones (US30) 33,734.88 −187.38 (−0.55%)
• DAX (DE40)  15,603.40 +74.86 (+0.48%)
• FTSE 100 (UK100) 7,256.94 −23.56 (−0.32%)
• USD Index  102.27 −0.90 (−0.87%)
   

Important events for today:

• China Consumer Price Index (m/m) at 04:30 (GMT+3);
• China Producer Price Index (m/m) at 04:30 (GMT+3);
• US FOMC Member Daly Speaks at 17:30 (GMT+3);
• US FOMC Member Mester Speaks at 18:00 (GMT+3);
• US FOMC Member Bostic Speaks at 19:00 (GMT+3);
• UK BoE Gov Bailey Speaks at 22:00 (GMT+3).

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