Commentary
While most global equity markets declined last week, the US benchmark indices delivered mixed results. Nasdaq 100 gained just above half a percent, primarily led by a rally in Alphabet stock. Meanwhile, S&P 500 and Dow Jones 30 lost the ground, with latter being heavily influenced by Disney’s fall in response to weak subscriber numbers in Disney+ streaming service.
Meanwhile, the US economic releases provided mixed signals. While headline inflation and PPI came in slightly below expectations, the consumer sentiment indicator showed a sharp deterioration in May. The underlying reason is likely a gradual weakening of broader economy, as illustrated by tighter lending conditions and softening labor market (initial jobless claims rose to 264,000 from 229,000 two weeks ago).
In Europe, the major news was Bank of England further restricting the monetary policy by 25bps to bring the base rate to 4.5%. Despite the weakening economic activity (as illustrated by the UK GDP), inflation in the UK remains at double-digits (10.1% y/y as of March 2023) and, therefore, is a primary concern for the monetary authorities.
Lastly, the April inflation in France and Germany came in as expected. In Germany, the headline figure fell to 7.2% y/y from 7.4% in March, while in France, it ticked upwards to 5.9% y/y from 5.7% in March.
