As we start a new week, let's take a look at the significant events in the global economy over the past week with our weekly financial update, presented by Bas Kooijman, the CEO and Asset Manager of DHF Capital SA.

The S&P 500 Index and the Nasdaq Composite Index reached their highest levels since mid-August and mid-April 2022 respectively. The debt ceiling agreement between the White House and Republican congressional leaders, which helped avoid a governmental default, didn't heavily impact market sentiment. Instead, attention turned to economic data like job openings which significantly rebounded in April, setting a record high since January.

Economic indicators showed signs of improvement with factory prices cooling, which could potentially counter inflation. The May nonfarm payrolls report, which tracks the number of jobs added or lost in the economy, exceeded expectations, however, the unemployment rate rose slightly, indicating a potentially tougher job market. This week also witnessed a decrease in longer-term U.S. Treasury yields, and the finalized debt ceiling agreement led to a fall in the yield on one-month Treasury bills.

In the corporate sector, a notable event was retailer CVS's sizable offering in the investment-grade bond market. Also, early redemptions, coupon payments, and tenders added over USD 6 billion to the high yield bond market, supporting prices. The upcoming week is expected to announce new deals.

Europe also saw noteworthy activity. While the STOXX Europe 600 Index remained unchanged, individual stock indexes presented a mixed picture. Inflation in the eurozone showed signs of slowing down. Despite this, European Central Bank (ECB) President Christine Lagarde indicated that rates might be tightened to address persistently high inflation. A dip in business optimism and a slowdown in wage and price hikes were observed in the UK.

Japan’s Nikkei 225 Index and TOPIX Index saw a rise, hitting new 33-year highs, backed by strong domestic earnings, yen weakness, and passage of the U.S. debt ceiling bill. Japanese tourism showed signs of recovery with the number of overnight stays by foreigners in April exceeding 10 million for the first time since the pandemic onset.

Chinese equities appreciated after the U.S. Senate passed the debt ceiling suspension, reducing the risk of a U.S. default, and reviving investors’ risk appetite. China’s official manufacturing PMI fell, marking its second month of contraction. However, private Caixin/S&P Global survey of manufacturing activity showed a surprising rise as output and new orders increased. The property sector saw a slowdown in growth with a decline in new home sales.

In summary, last week's global financial landscape demonstrated resilience amidst economic uncertainties, illustrating the market's dynamic nature and its capacity to adapt and thrive, even during periods of political and economic fluctuations.