Markets had a positive week across the globe. In the US, all eyes were on the Federal Reserve’s speech on Friday. Across the pond, in the UK, growth appears to be slowing down, whereas the European economy continues to remain in expansion mode throughout the summer.
US: Central bank reiterates slow removal of stimulus measures
Stock markets started the week strongly after the Food and Drug Administration (FDA) provided full approval for the Pfizer-BioNTech COVID-19 vaccine. However, stocks fell on Thursday as an attack at Kabul airport in Afghanistan amid the US military’s withdrawal from the country resulted in casualties. On Friday, Federal Reserve Chair Jeremy Powell delivered a speech at the Jackson Hole conference, where he cemented expectations that the central bank will begin a slow removal of its crisis-era stimulus measures later this year.
Japan: COVID-19 wave continues to hurt Japanese economy
The Japanese government extended its COVID-19 state of emergency in several area to last until 18 September. Infections continue to spread rapidly across many regions, but Japan has been speeding up its vaccination drive in recent months: 60% of the country’s population is expected to be fully vaccinated by the end of September. Business activity in Japan’s large services sector shrank at the in August, highlighting the heavy toll the recent wave of COVID-19 infections is taking on its economy.
China: Is policy shifting amid an uneven economic recovery?
The People’s Bank of China (PBOC) met with leading financial institutions to urge them to strengthen credit support to the economy, suggesting that policy is shifting toward further easing amid an uneven economic recovery. Elsewhere, the China Securities Regulatory Commission pledged to cooperate with their US counterparts regarding the auditing of Chinese companies that trade in the US. On the coronavirus front, China’s daily cases dropped to single-digit levels following tough measures in recent weeks.
Europe: Strong recovery continues into August
The eurozone economy appeared to remain in expansion mode in August, with the early headline number for the composite Purchasing Managers’ Index (PMI) coming in at 59.5. PMI readings greater than 50 indicate an expansion in economic activity levels). The pace of growth in the manufacturing and services sectors cooled off slightly from the previous month but remains very strong.
UK: Growth appears to be cooling off
The preliminary reading the UK’s composite PMI tumbled to 55.3 in August compared with 59.2 in July. The manufacturing sector slipped slightly but the services sector contracted more profoundly. Elsewhere, it has been reported that the UK government would roll out a programme to deliver booster shots of the coronavirus vaccine to the most vulnerable populations, beginning in early September, and later expand eligibility to those 70 years and older.
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