A look at the day ahead from Julien Ponthus.
The jury is still out as to how the G7 deal to tax a minimum out of global behemoths such as Amazon and Google will impact EPS metrics and balance sheets but it seems that in the meantime investors are not running to the hills.
The consensus view seems to be that while one big component of the two certainties in life – death and taxes – is soon to hit big U.S. tech firms, the devil and tax lawyers are expecting to have fun playing with the details.
Futures for European bourses and Wall Street are just slightly in the red, much in sync with the session in Asia which saw stock benchmarks perform a very orderly retreat.
There’s a lot of uncertainty out there on the implementation of a minimum global corporate tax rate of at least 15%, notably how keen the rest of the world outside the richest nations are willing to play ball.
Meanwhile, the name of the game remains inflation and whether the post-COVID 19 economic rebound will force the U.S. Federal Reserve to taper if U.S. President Joe Biden pulls off his proposed $1.7 trillion infrastructure plan.
Yields on U.S. 10-year notes below 1.6% tend to suggest little stress on that front.
The May U.S. job data showed there was a long way to go to reach the Fed’s full employment goal even if the door to talking about tapering might be open at the June policy meeting.
Not many are however holding their breath for the European Central Bank’s policy meeting this Thursday with a status quo pretty much a given.
Still, this morning showed strong activity with China’s imports growing at their fastest pace in 10 years in May, fuelled by surging commodity prices.
Bitcoin is still well below the $40,000 bar gaining little from El Salvador President Nayib Bukele saying he would send a bill to Congress to make the cryptocurrency legal tender.
Key developments that should provide more direction to markets on Monday:
— United Kingdom Halifax House Prices for May
— Euro Zone Sentix Index for June
— Auctions: US 6mth and 3 mth -bills (Reporting by Julien Ponthus)