European markets opened strongly today though, showing continued strength in the face of all this persistent chatter about increasing borrowing costs and surprise bad economic data. Still, investors are entering the market with cautious optimism. They’re particularly keenly waiting for the release of the Job Openings and Labor Turnover Survey (JOLTS), which will shed more light on just what kind of shape the labor market is in.
Later today, the JOLTS report will be out. As usual, many are looking forward to it, especially as it might provide more signal than noise on the emerging labor market cooling. Analysts will scrutinize the data for indications of job openings, which could signal shifts in employment trends and influence future economic policies.
In early morning trading, Alphabet shares seem to be getting most of the buzz, up 5.8%. A recent court ruling affirmed Alphabet’s ability to maintain its Google Chrome browser as an integral part of its broader ecosystem. We hope this decision will bolster confidence all around in the tech sector. This is particularly ironic given that former President Donald Trump led the charge against individual digital sales taxes imposed by countries around the world. Trump’s opposition to these types of taxes seems to further cushion the environment for big businesses who do digital.
Though this has been a welcome development for European markets, worries still remain over high levels of debt and the direction of the Services Purchasing Managers’ Index (PMI). The PMI services data, one of the broadest measures of the health of the services sector, is the most important signal for ongoing economic stability. Investors are on edge as they weigh possible effects on future borrowing costs and long-term economic growth.
Focus here in the United States is still split between political machinations and economic metrics. Just this week, Trump denied his administration’s support for countries that have passed their own digital sales taxes, calling for a reciprocal response. New uncertainty has emerged with an appeals court decision declaring Trump’s preferred tariffs unlawful. Scott Bessant confirmed that they are working on plans to introduce these tariffs under a new framework. This will only occur if the court upholds their removal.
Additionally, all eyes are on France ahead of a possibly historic election next week that could remake the country’s policy front. The outcome of this election would determine not only the direction of domestic policy, but broader European economic policy as well. Observers are still closely watching how this political change could impact favorable market conditions and bullish investor sentiment.
Today’s market rally looks like a classic dead-cat bounce after two weeks of correction. Investors continue to bet on the sunny upside scenarios even as the dark economic clouds continue to linger all around us. Our European markets are very much on the ground working on those issues. Next, close focus goes to the effects of today’s economic reports and political developments.