Weekly Market Overview
Last week, global stock markets were generally mixed. In Asia, the Nikkei 225 index was higher by less than 2% to close on Friday at 16,412, while China’s Shanghai Composite fell by 3% to 2,827. In Europe, the German DAX 30 was higher by less than 1% to 9,953, while the U.K.’s FTSE 100 was relatively unchanged to 6,139. In the U.S., the S&P 500 was off by less than a 0.50% to finish out the week at 2,047. The tech-heavy Nasdaq Composite lost 0.2% to 4,718.
In commodities, metals lost ground on US dollar strength, with gold trading lower for the week by about 2% to $1,274. Copper shed nearly 4% to finish out at $2.074.
WTI crude oil closed higher for the fifth week out of six to a level of $46.21 per barrel, gaining over 3.5%.
The US dollar managed a second week of gains versus a basket of its major counterparts, with the US Dollar Index adding about 75 basis points to finish at 94.61. The Euro (EUR/USD) finished out at $1.1303, off by 90 basis points, while cable (GBP/USD) weakened to $1.4355, lower by approximately 50 basis points. The Australian dollar (AUD/USD) continued its slide for a third week in a row, lower to a rate of $0.7265, -1.4%. The Japanese Yen weakened by less than 1% against the US dollar (USD/JPY) to a rate of ¥108.63. The Canadian dollar (USD/CAD) was relatively flat, ending the week at 1.2937.
*All times GMT NOT BST (so are showing as 1 hour before the event), estimates via Thomson Reuters.
Slow start to the week with no high impact data slated to be released.
At 1:30, the Reserve Bank of Australia is expected to release the minutes from the May 3 meeting. The central bank cut its benchmark rate from 2% to 1.75% in an effort to boost sagging inflation and further weakening the Australian dollar in an effort to bolster exports. AUD/USD has dropped over 5% since the rate cut and is now trading at its worst level in over two months.
In the UK, the Producer Price Index for April is due out at 8:30, but will take a backseat to the more widely watched Consumer Price Index, to be released at the same time. Analyst on average are looking for the year-over-year reading to match the 0.5% print in March, while ticking lower to 0.3% from 0.4% on a month-over-month basis. Core CPI in March was 1.5% YoY, no estimate available for April.
In the early afternoon at 12:30, the US Consumer Price Index is expected to show a slight slowdown in inflation on a year-over-year basis in April, while moving slightly higher from March. The YoY estimate is 1%, while the MoM data is expected to show growth of 0.4%. The ‘core’ figure, which strips out volatile food and energy prices, is expected to increase 0.2% MoM from 0.1% MoM in March, while ticking down to 2.1% from 2.2% YoY.
In the evening at 23:50, Japan will post preliminary figures for the first-quarter’s gross domestic product. On an annualized basis, analyst expect to see growth pick up by 0.2% after the 1.1% contraction experienced in Q4. From Q4 to Q1 the economy is expected to have grown by 0.1%; prior QoQ growth rate was -0.3%.
At 7:00, the European Central Bank will hold a non-monetary policy meeting. No adjustments to monetary policy will be made.
At 9:00, the Eurozone Consumer Price Index is expected to show inflation on an annualized basis remain at -0.2% in April. No estimates for month-over-month or ‘core’ data at this time. The prior ‘core’ reading in March was +0.8% YoY.
At 18:00, the FOMC minutes will be published, providing further scope into the Fed’s thoughts on the path of interest rates. Expectations for a rate hike at the June meeting are currently below 10%; it will require a very substantial uptick in economic data between now and June 15 in order to boost expectations. The sluggish rate of economic growth, although currently expected to rebound in Q2 from the Q1/Q4 malaise), low inflation, and slowing job growth are likely to keep the Fed at bay for the foreseeable future.
At 1:30, Australia employment data for April will be released. No estimates at this time. In March, the Australian economy lost 8.8k full-time jobs, while adding 34.9k part-time positions. The unemployment rate was 5.7%.
At 8:30, UK retail sales for April are due to be released. The market will be looking to see if it can bounce back after the retail sector slumped in March, with sales declining 1.3% from February. Ex-fuel, retail sales fell 1.6%. While weak in the short-term, retail sales have grown by 2.7% (1.8% ex-fuel) from a year-ago.
At 11:30, the European Central Bank will release its ‘meeting accounts’, which provides an overview on financial markets, in addition to economic and monetary developments.
The week will end on a fairly quiet note in terms of data releases. No significant European or U.S. data is scheduled. At 12:30, the Bank of Canada will publish Consumer Price Index data. Analyst are looking for the pace to slow down to 0.1% MoM in April from 0.7% MoM in March. From a year earlier, inflation is expected to remain at a pace of 2.1%.