Weekly financial market overview 31.05.-06.06.
Main events of the previous week
G7 countries have agreed on the principle of introducing at least 15% of the global minimum corporate tax for corporations applicable to each country, which will create a level playing field for all companies and discourage attempts to evade taxes. In accordance with the principles of this reform, the world's largest firms with a profitability of at least 10% will be covered, while 20% of any profits in excess of 10% will be redistributed and then taxed in the countries where they make their revenue. The move should help countries force large multinationals like Google, Amazon, Facebook and Apple to pay more taxes. Many states have tried to achieve this for many years, since such corporations are often registered in jurisdictions with preferential or lenient tax regimes. The initiative was also supported by the International Monetary Fund. IMF chief economist Gita Gopinath highlighted that it is a serious concern that many countries are evading taxes by sending money to tax havens, which in turn reduces the tax base from which governments can collect revenues and use them for necessary social and economic spending. The head of the US Treasury, who in May initiated the adoption of the minimum tax rate at 15%, Janet Yellen, called the G7's decision an unprecedented commitment. This will put an end to the race to reduce corporate taxation, she said. A global minimum tax will also help the global economy flourish, create a level playing field for businesses, and encourage countries to compete on positive terms, such as training employees and investing in research, development and infrastructure. Companies like Facebook and Google have said they welcome the tax policy update.
Eurozone. The consumer price index in May rose by 0.3% versus April, while the annual inflation rate was 2%. The growth of the core inflation rate, excluding food and energy, amounted to 0.9% y/y in May.
The unemployment rate in April fell by 0.1 percentage points to 8%, the lowest since June 2020.
US. The unemployment rate in May fell by 0.3 percentage points to 5.8%, and the number of non-Farm payrolls amounted to 559 thousand, which is 51 thousand less than expected and 281 thousand more than a month earlier.
The number of initial jobless claims for the week was registered in the amount of 385 thousand, which is 20 thousand less than the previous week and 5 thousand less than predicted by analysts.
China. According to the assessment of Caixin Bank, in May, the PMI in the manufacturing sector, as expected, rose by 0.1 percentage points and amounted to 52 points, in turn, according to the National Bureau of Statistics of China, the PMI Manufacturing in May was 51.
Key events this week
- On Monday, China will publish trade balance data for the month of May.
- On Tuesday, the trade balance data will become known in the United States, and the Eurozone will give another estimate of GDP for the first quarter.
- On Wednesday, the US will report on changes in oil reserves for the week, and in China, an increase in the price level for May will become known.
- On Thursday, the ECB will publish its decision on the key interest rate and on a press conference the ECB will outline its vision of economic development, in turn, the US will publish the rise in prices in May and the number of initial jobless claims for the week.
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