The first week of June in the financial markets was in the spirit of cautious growth of stock indices. He made him forget at least one May sale, during which the main US stock exchange indices lost more than 8 percent of their value.
For a calm start to the new month, the markets are mainly new economic indicators. They have confirmed that the world’s largest economy continues to undergo a gradual recovery. They have at least forgotten about the budget problems of some European countries, which have to fight high deficits of current budgets and growing investor distrust.
But even that did not spoil the relatively good mood of traders last week. This was mainly supported by the results from the United States, from where he saw the situation in the manufacturing sector, the services sector and, above all, the highly expected results from the labor market.
The new data confirmed that the manufacturing sector and services continue to expand, give orders and, in particular, recruit new employees. It is the first labor market to have been the Achilles heel of the US economy in recent months and a major source of doubt about the economic boom. Since last year, however, he has also been able to stand on his own two feet, which was confirmed by the May results of employment. It grew by 431 thousand people, which was the biggest finger in the last ten years.
The United States is still the engine of world economies and American demand is one of the main sources of growth in Europe and Asia. Therefore, traders in this part of the world, where the stock indices there copied the development in the USA, also drank this share with the left. Only in Europe, for example, the German stock index DAX grew by more than one percent and pl.
The banking sector is still one of the main risks
Even so, the financial markets are far from over. This was also indicated by the European Central Bank, which last week warned against the possibility of spreading “orders”, for example, in the European financial sector. This could be through growing distrust in the bonds of countries such as Greece, Portugal, Ireland, Spain, or Italy, which owes European banks more than 2.8 trillion euros.
The ECB sent losses to 195 billion euros in its latest financial stability report. Should the financial sector return to the sweat, the economic recovery will weaken again very quickly.
If the situation in the banking sector is not improving at all, suggest the latest weakness published by the European Central Bank. At the end of the week, the commercial banks kept almost 300 billion euros, which is the same as at the outbreak of the financial crisis in June 2008. Banks hold these liquid funds as a reserve for the ECB rather than lending them to other financial and non-financial institutions. who are not sure of their return.
Thus, although the economy continues to grow, even after last week, it seems evident that even the diligent efforts of politicians and central banks to calm back from the past month have not been in a hurry.