Weekly house view

The week in review

A stronger-than-expected US jobs report unsettled markets at the end of last week, increasing expectations for higher Federal Reserve interest rates and sending stocks sharply lower. The jobs report was the latest data to show the US economy remains strong despite the Iran conflict, which flared up again over the weekend as Israel and Iran traded air strikes.

Contributing to the sell-off was an announcement from S&P Dow Jones Indices that SpaceX would be denied fast-track entry into the blue-chip S&P 500 index, which would have attracted demand for its shares from passive investment funds that track the index. The S&P 500¹ fell 2.5%.

The oil price rose after the weekend exchange of air strikes in the Middle East. OPEC+ decided to increase its production by 188,000 barrels a day in July, though shipping restrictions in the Strait of Hormuz will limit the impact on global markets. Exxon and Chevron executives said inventories are very low and that oil prices could spike to USD 150 per barrel. Higher oil prices bring more revenue to Moscow, but senior Russian government officials nonetheless warned President Vladimir Putin that spending on the war in Ukraine is on an unaffordable path.

Quote of the week

US President Donald Trump acknowledged calling Israeli Prime Minister Benjamin Netanyahu “crazy” in an expletive-filled phone exchange. "I did," Trump told the ‘Pod Force One’ podcast. “I wouldn't say angry. I was a little bit perturbed at his constantly fighting with Lebanon.”

Key data

The US economy added 172,000 jobs in May, far exceeding expectations for a gain of 85,000. Hiring figures for March and April wererevised up. Job openings jumped to a two-year high in April.

In further signs that the US economy remains robust, new orders for US factory goods posted their biggest increase in nearly a year in April. The latest Redbook index of same-store sales showed an uptick in retail sales growth. US manufacturing activity expanded in May at the fastest pace in four years.