Over the weekend, the focus among the market participants was the June jobs data released on Friday. The numbers were highly anticipated because of the May disappointment. Fortunately, the numbers was much better than expected. In June, the US economy added more than 224k jobs, which was higher than the expected 160k. The unemployment rate increased to 3.7% while the participation rate increased to 62.9% from the previous 62.8%. The numbers were positive, meaning that investors expect the Fed to slash rates two times from the previous three.
Deutsche Bank was in the spotlight over the weekend as the management unveiled its restructuring strategy. As expected, the bank announced that it may quit its equities trading business and create a 74 billion euro bad bank. The bank entered the equities trading business as the management tried to make it a major Wall Street bank in the same statue as its American rivals like Goldman Sachs and JP Morgan. This restructure may push the bank’s second quarter net loss to 2.8 billion euros and the total restructuring to more than 7.4 billion euros. This is a significant amount for a bank that is worth about $15 billion. More than 20k jobs are expected to be lost.
In the United Kingdom, investors continued to react to the news that the country was nearing a recession. Economic data from the country has been declining after the country decided to leave the European Union in 2016. The recent extension to the deadline and the ongoing decision to decide who may be the prime minister has soared the sentiment among investors and businesses. They are afraid of investing because no one knows what may happen on October 31st. According to the latest Fulcrum nowcasts, UK activity has declined to -0.8%, which was lower than the previous 1.0% gain. Last week, governor Mark Carney said that UK investment had declined by 12%. Further, the recent positive data are because of the increased precautionary stock building.
Investors were also concerned about the person who may lead the International Monetary Fund (IMF). This is after European leaders announced that they may love Christine Lagarde to lead the European Central Bank (ECB). According to France Finance Minister, the position may have to remain in Europe. Among, the most notable candidates for the job are BOE’s Mark Carney, ECB’s Mario Draghi, and Allianz chief economist, Mohammed El Erian.
On geopolitical issues, Iran announced that it may breach the curbs on uranium enrichment, which were part of the Iran nuclear deal. The deal was trashed by the Trump administration. In a press conference, the country’s deputy foreign minister said that the decision happened in line with the deal. He also said that the European Union were partly to blame for not increasing its support to the country. The country’s economy has been hurt with the sanctions the US has put in place. Today, it exports more than 200k barrels of oil. Before the sanctions, the country used to export more than 2.5 million barrels of oil.