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Weekly Market Report

13 May 2019

13 May 2019


The Market Last Week

Global equities ended lower last week, amid ongoing geopolitical tensions.

UK Markets ended the week in negative territory, amid persistent Brexit concerns and tensions over US-China trade talks.

UK’s manufacturing production registered an unexpected advance on a monthly basis in March.

The RICS house price balance remained steady at its worst level in nearly eight years in April.

Trade deficit narrowed less than expected in March.

Construction output declined more than market anticipations on a monthly basis in March.

The Halifax house price index rose on a monthly basis in April, at par with market consensus.

Gross domestic product (GDP) jumped in line with market forecast on a quarterly basis in the first quarter of 2019.

Industrial production jumped more than market expectations on a monthly basis in March.

European Markets ended lower last week, after the European Commission downgraded Eurozone’s growth outlook for 2019.

The Eurozone’s final services PMI recorded a drop in April.

Retail sales in the Eurozone rose more than expected on an annual basis in March.

The Eurozone’s Sentix investor confidence index improved in May, marking its highest level since November 2018.

Germany’s monthly seasonally adjusted factory orders rose less-than-anticipated in March.

Seasonally adjusted industrial production in Germany unexpectedly rose on a monthly basis in March.

Germany’s final services PMI climbed to its highest level since September 2018 in April.

Germany’s trade surplus widened more than market forecast in March.

Germany's current account surplus widened more than market expectations in March.

US Markets ended mostly weaker last week, after the US raised tariffs on Chinese goods, further raising trade tensions between the two countries.

The US consumer price index (CPI) rose less than market forecast on an annual basis in April.

The producer price index (PPI) advanced less than market expectations on a yearly basis in April.

Seasonally adjusted initial jobless claims recorded a less-than-expected drop in the week ended 04 May 2019.

In the US, consumer credit rose at its slowest pace in 9-months in March.

The JOLTs job openings in the US jumped more than expected in March, recording its highest level in a year.

The MBA mortgage applications climbed on a weekly basis in the week ended 03 May 2019.

Consumer credit recorded a rise in March.

Trade deficit widened less than market forecast in March.

Average weekly earnings rose on a yearly basis in April.

Monthly budget surplus narrowed less than market forecast in April.

Federal Reserve Chairman, Jerome Powell, in his speech, stated that the US economy is supported by strong fundamentals and a robust GDP growth is expected for the rest of 2019. However, he stated that “patient stance on policy is still warranted.”

Asian Markets ended lower last week, tracking losses in its US counterparts.

Australia’s ANZ Roy Morgan weekly consumer confidence index eased in the week ended 05 May 2019.

Home loans in Australia fell more-than-expected on a monthly basis in March.

Australia’s retail sales rose more than market forecast on a monthly basis in March.

Trade surplus in Australia narrowed less than anticipated in March.

The Reserve Bank of Australia (RBA), in its latest policy meeting kept its key interest rate unchanged at 1.50%. However, the central bank stated that rates may not remain that way for long and signalled that it might cut interest rates in the coming months depending on incoming economic data.

The RBA, in its monetary policy statement, downgraded forecasts for growth and inflation and signalled that it will consider lowering interest rates if unemployment does not fall further. Accordingly, the central bank slashed its trimmed mean CPI forecast for 2019 from 2.00% to 1.75%, and for 2020 from 2.25% to 2.00%. Additionally, the central bank expects the Australian economy to slow sharply to 1.75% in June compared to the 2.25% projected six months ago, with the December target downgraded from 3.0% to 2.75%.

China’s trade surplus unexpectedly narrowed in April.

Japan’s final Nikkei manufacturing PMI advanced more than expected in April.

Household spending in Japan rose more than market expectations on a yearly basis in March.

Japan’s Nikkei services PMI eased in April.

The Bank of Japan (BoJ), in its monetary policy meeting minutes, indicated that members saw no immediate need to expand an already massive stimulus programme and warned of heightening risks to Japan's recovery. Additionally, the officials cautioned that the central bank’s prolonged ultra-loose monetary policy could impact regional banks' profits.

The BoJ summary of April monetary policy meeting revealed that there continues to be risk that Japan may slide into recession depending on sales tax hike impact, overseas developments. Additionally, the bank stated that uncertainty on price outlook will persist through fiscal 2021.


Currency Update

The EUR ended higher against the USD, after the Eurozone’s investor confidence index climbed to its highest level since November 2018 in May.
The British Pound ended lower against the greenback, amid ongoing uncertainty over Brexit deal.
The US Dollar ended mostly lower against its major counterparts last week, after the US annual consumer prices rose less-than-expected in April.


European Union cuts Eurozone’s growth forecast

The European Union (EU), in its latest report, slashed Euro-zone’s 2019 growth forecast to 1.2% from 1.9% predicted earlier, amid uncertainty over trade conflicts and Brexit worries. Further, the estimate for 2020 was lowered to 1.5% from 1.6%. Additionally, the EU cut Germany’s growth outlook for this year to 0.5% from 1.8%, citing weakness in the auto industry. However, the Commission stated that inflation is likely to stay at this year's levels and below the European Central Bank's target.


The Week Ahead

Going ahead this week, investors will keep a tab on the US advance retail sales, the Empire State manufacturing index, industrial and manufacturing production along with the NAHB housing market index, business inventories, housing starts, the Philadelphia Fed business outlook and the Michigan consumer sentiment index for further direction. Additionally, the Eurozone’s GDP, CPI, industrial production and the ZEW survey economic sentiment index along with Germany’s GDP, CPI and the ZEW survey indices will attract significant investor attention. Also, UK’s claimant count rate, ILO unemployment rate and average weekly earnings will be on investors’ radar.



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