Weekly market recap

Your weekly global financial market newsletter

  • Speculation about the US Fed's monetary policy settings has not subsided, nor have comments by several policymakers over the past week. And high inflation expectations of US consumers have added even more uncertainty to the story. Annual inflation expectations in the University of Michigan's Consumer Sentiment Survey rose to 3.5% in May from 3.2%, the highest level since November, and longer-term expectations were also higher.
  • Some FOMC members are even questioning whether current monetary policy is set restrictively enough to achieve the 2% inflation target. Dallas Fed President Lorie Logan has commented to the effect that it is still too early for the Fed to consider cutting rates.
  • Minneapolis Fed President Neel Kashkari expressed the sense that he is waiting to see what data we see in the near term, but that the Fed can maintain current rates for as long as necessary. On the other side of the ledger is Atlanta Fed President Raphael Bostic's view that inflation will eventually slow enough to allow for a rate cut of at least a quarter percentage point by the end of the year.


US stocks saw further gains in a quiet week with no major macro data. Wednesday was thus the session with the third lowest volume of traded shares this year. Stock indices saw the strongest gains on Thursday following the release of initial jobless claims data. This rose unexpectedly sharply, rekindling speculation around an earlier rate cut by the Fed, although policymakers themselves are still targeting later dates. The S&P index ended at a 4-week high and the DJIA index is on an 8-day winning streak.

European stocks have also been on a long winning streak, buoyed by expectations of an early rate cut by the ECB and other major central banks. The major indices ended the week in the positive, and the DAX, FTSE and STOXX Europe 600 even surpassed their all-time highs. The pan-European STOXX Europe 600 ended 3.01% higher, Germany’s DAX gained 4.28%, France’s CAC 40 put on 3.29%, and the UK’s FTSE 100 Index increased 2.68%.



Gold has returned to growth again, helped by several important factors. The underlying factor is, of course, the growing speculation of interest rate cuts by the US Fed and other central banks. Thursday’s US unemployment claims data, which points to a cooling labour market, strongly supports this speculation. Another factor to the upside is the unending tensions in the Middle East, which reinforces gold’s position as a safe haven.

Oil prices have seen a fairly volatile week, with oil prices looking set to record a weekly rise until Thursday, thanks to an improving global demand outlook, increasing demand from China and the aforementioned Middle East conflict. However, Friday’s comments by some FOMC members ultimately suggest that US interest rates will remain high for longer than expected. This could have a negative impact on US fuel demand. The significant drop in consumer confidence also feeds speculation of a loss of momentum in the U.S. economy, which is then further supported by the increase in petrol inventories indicating a drop in demand.



The US Dollar strengthened slightly during the week, but Thursday’s jobless claims report marked a more significant drop. Policymakers, however, are very cautious about cutting rates and do not want to hasten a rate cut by any means. While the markets still expect the rate cuts to begin in September, we will be much wiser after the April PPI and CPI data due this week.

The Euro hit a monthly high around 1.078 during the week, helped in particular by Thursday’s US labour market numbers. In the end, however, speculation about which central bank will start cutting interest rates sooner will probably prevail. And since it looks today like the ECB plans to start cutting in June, with the Fed not due to do so until September, the Euro had no chance to get higher against the Dollar than the aforementioned 1.078.



Thursday’s initial jobless claims report proved to be one of the most important in the past week from the investors’ perspective. The number of people filing for unemployment benefits rose to 231,000, the most since last August and well above expectations of 212,000. 

Further signs of a possible cooling economy came from the University of Michigan’s consumer confidence index, which unexpectedly fell to 67.4 from April’s 77.2, with markets expecting a slight decline to 76.0.

The Bank of England left interest rates on hold at 5.25%, leaving investors in uncertainty as to what happens next. Two members of the MPC voted for a rate cut and BoE Governor David Bailey said there may need to be a more significant cut than markets expect. However, it will all depend on labour market data and inflation.

Britain’s economy posted its strongest growth in three years in the first quarter, emerging from the recession it fell into in the second half of last year. GDP grew by 0.6% in the three months to March, the fastest growth since Q4 2021. This was quite a surprise after the economy fell by 0.3% in Q4 2023 and forecasts of 0.4% growth. As was the 0.4% month-on-month growth in March against expectations of 0.1% growth. Data also showed that GDP in March was 0.7% higher than a year earlier, and above all economists’ expectations of a 0.3% rise.

What to watch out for this week

  • Next week will be much more lively in terms of macro data than the previous one. In the US, the most awaited data will be April inflation, both producer and consumer inflation. On a monthly basis, the CPI is expected to rise by 0.3% compared to March, after rising by 0.4% in the previous month. Likewise, the monthly Core CPI is expected to slow from 0.4% to 0.3%. Year-on-year growth is expected to slow from 3.5% to 3.4%, with the Core reading slowing from 3.8% to 3.6%, which would be the slowest in three years. PPI data is expected to show a 0.2% increase in both headline and core producer prices from the previous month, the same as in March.
  • Lower-than-expected numbers would confirm the Fed's willingness to start cutting rates as early as this fall, while higher inflation would bring nervousness and volatility to the markets as it would reduce the possibility of a rate cut later this year to a minimum.
  • In addition to inflation, investors' attention should be drawn to retail sales, which are expected to slow their growth from 0.7% to 0.4% in April. Also, the NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, housing starts and building permits will be interesting numbers. And we can't forget the comments from Fed officials, who may provide clues on the future direction of monetary policy.
  • In Europe, we will see the second preliminary GDP data for the Eurozone for the first quarter, which should confirm a 0.3% expansion in the Eurozone economy, the fastest pace of growth since the third quarter of 2022. In addition, final inflation data will arrive in the Eurozone, and in Germany, where the ZEW economic sentiment indicator for Germany will also be closely watched, which is expected to rise for the tenth consecutive month in May, reaching its highest level since February 2022.
  • In the UK, attention will focus on the employment report, with forecasts suggesting the unemployment rate will rise to 4.3% in the first quarter, while wage growth is expected to slow the most since the second quarter of 2022.
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