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Global equity markets ended mostly firmer last week. UK markets ended the week in positive territory, amid reports that Britain plans to remain in the customs union after Brexit and buoyed by gains in energy sector stocks. On the data front, UK’s unemployment rate remained steady at a 42-year low in the January-March 2018 period. Further, average weekly earnings advanced for a second month in a row in the same period. Moreover, the Rightmove house price index advanced on a monthly basis in May. European markets ended the week on a positive footing, amid weakness in the euro. Data indicated that the Eurozone’s gross domestic product (GDP) rose at par with market expectations in the first quarter of 2018. Additionally, the consumer price index (CPI) advanced meeting market forecast on an annual basis in April. Further, trade surplus widened more than market expectations in March. On the contrary, the region’s construction output fell more than expected in March. Separately, Germany’s GDP rose at a weaker than expected pace in the first three months of 2018. Additionally, the nation’s CPI remained unchanged in April. US markets ended the week in red, amid concerns over rising US Treasury yields. On the macro front, the US MBA mortgage applications declined for the sixth straight week in the week ended 11 May 2018. Further, initial jobless claims climbed more than market expectations last week. Meanwhile, the nation’s industrial production rose higher-than-expected in April, marking its third straight month of gains. Moreover, advance retail sales rose meeting market expectations in April. Asian markets ended mixed last week.

 
     

Currency Update

 

The EUR ended lower against the USD, amid political developments in the Eurozone’s third largest economy, Italy.
The British Pound ended weaker against the greenback, amid tensions over whether Britain would stay in the customs union after Brexit.
The US Dollar ended stronger against its major counterparts last week, amid rise in the US Treasury yields

 
 

 

RBA minutes: Central Bank sees little reason for a near-term interest rate hike

 

According to minutes of the Reserve Bank of Australia’s (RBA) May meeting, officials shared a broad agreement that interest rate should remain at the current low level in the foreseeable future, as inflation is likely to remain sluggish in the wake of stubbornly weak wage growth. Further, policymakers reiterated that any future movement in interest rate is more likely to be up than down.

 
 

 

The Week Ahead

 

Going ahead this week, investors will closely watch the FOMC minutes, the US MBA mortgage applications, Markit manufacturing and services PMI along with initial jobless claims, Michigan consumer sentiment index and durable goods orders for further direction. Also, UK’s GDP, public sector borrowing, CPI and producer price index along with Markit manufacturing and services PMI across the Eurozone will be on investors radar. Moreover, Eurozone’s consumer confidence index, Germany’s GDP, Ifo indices and GfK consumer confidence index will attract significant amount of investor attention.

 
 

 
 

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