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Weekly Market Report

27 May 2019

27 May 2019


The Market Last Week

Global equities ended lower last week, amid ongoing global geopoltical tensions.

UK Markets ended the week in negative territory, amid persistent uncertainty related to Brexit.

In the UK, balance of firms reporting total order book above normal unexpectedly fell in May.

Britain’s consumer price index (CPI) rose less than market forecast on a yearly basis in April.

The annual producer price index (PPI) in the UK recorded a less-than-anticipated advance in April.

The nation’s house price index climbed in April.

Public sector net borrowing recorded a deficit in April.

UK’s retail sales recorded an unchanged reading on a monthly basis in April.

European Markets ended the week on a negative footing, amid US-China trade war jitters.

The Eurozone’s current account surplus unexpectedly narrowed in March.

The services PMI in the Eurozone registered an unexpected fall in May.

The Eurozone’s Markit manufacturing PMI unexpectedly eased in May.

The consumer confidence index in the Eurozone rose more-than-expected to a 7-month high level in May.

Germany’s gross domestic product (GDP) climbed in line with market expectations in the first quarter of 2019.

In Germany, the PPI advanced more than market expectations on an annual basis in April.

Germany’s Markit manufacturing PMI recorded an unexpected drop in May.

The services PMI in Germany slid more than market forecast in May.

Germany’s Ifo business climate index declined more than market anticipations in May.

The Ifo current assessment index in Germany unexpectedly fell in May.

Germany’s Ifo business expectations index recorded an unchanged reading in the May.

The European Central Bank, in its April monetary policy minutes, showed declining confidence in growth recovery and indicated that the Eurozone’s economic growth would be weaker than expected. Meanwhile, ECB officials called for more support for the economy, but argued that more analysis was needed to see if the rapid loss of economic momentum is persistent or temporary.

US Markets ended the week in red, led by persistent trade worries between the US and China.

The US Chicago Fed National activity index dropped more-than-anticipated in April.

Existing home sales unexpectedly fell for a second consecutive month on a monthly basis in April.

The Markit manufacturing PMI unexpectedly eased to a nine-and-a-half year low in May.

The services PMI recorded an unexpected drop in May.

In the US, MBA mortgage applications rebounded in the week ended 17 May 2019.

New home sales declined more than market forecast on a monthly basis in April.

Durable goods orders registered a more-than-expected decline in April.

Initial jobless claims surprisingly dropped in the week ended 18 May 2019.

The Federal Reserve (Fed) Chairman, Jerome Powell, warned over the rising levels of business debt. However, he stated that it does not pose a larger threat to the financial system and considers the risks to be “moderate”.

The Fed meeting minutes indicated that policymakers are in no rush for a near-term move in monetary policy as inflation is likely to remain subdued. Additionally, the minutes suggested that the Fed’s patient approach to rate-change would be appropriate “for some time.” Meanwhile, officials expressed concerns over the escalating trade tensions between the US and China and its impact on the global economic growth.

Asian Markets ended weaker last week, mirroring losses in their US counterparts.

Australia’s ANZ Roy Morgan weekly consumer confidence index climbed in the week ended 19 May 2019.

Australia’s Westpac leading index dropped on a monthly basis in April.

In Australia, the CBA manufacuring PMI jumped in May.

The Reserve Bank of Australia (RBA), in its May meeting minutes, indicated that the central bank would cut interest rate twice in next seven months if there was no further improvement in the jobs market. The bank highlighted downside risks to the household consumption growth and global economy and expressed uncertainty over a gradual return to its inflation target.

Japan’s merchandise (total) trade surplus narrowed more-than-expected in April.

Japan machinery orders advanced on a monthly basis in March.

Japan’s manufacturing PMI dropped in May.

In Japan, the national CPI registered a rise on a yearly basis in April, meeting market expectations.

In Japan, the final machine tool orders fell on an annual basis in April.


Currency Update

The EUR ended firmer against the USD, after the Eurozone’s consumer confidence index jumped to a 7-year high level in May.
The British Pound ended weaker against the greenback, after British Prime Minister, Theresa May, announced her resignation.
The US Dollar ended mostly weaker against its major counterparts last week, amid dismal economic data in the US.


OECD lowers global growth outlook

The Organisation for Economic Co-operation and Development (OECD), in its latest report, slashed the global growth forecast for 2019 to 3.2% from 3.3% forecasted in March, citing escalation in trade wars. The global outlook for 2020 was maintained at 3.4%. According to the report, the US economy is forecasted to grow 2.8% in 2019 before slowing to 2.3% in 2020. Growth in euro area is estimated at 1.2% this year and 1.4% for the next year. Moreover, Britain’s growth is forecasted to climb 1.2% in 2019 and 1.0% in 2020. Meanwhile, China's growth is expected to ease to 6.2% in 2019 and to 6% in the next year.


The Week Ahead

Going ahead this week, investors will keep a tab on the Eurozone’s economic and consumer confidence index along with Germany’s CPI, retail sales, GfK consumer confidence index and unemployment rate for further direction. Additionally, the US GDP, consumer confidence index, initial jobless claims, advanced goods trade balance, pending home sales and the Michigan consumer sentiment index along with UK’s BBA loans for house purchase, the BRC shop price index, the GfK consumer confidence index and net consumer credit will be on investors’ radar.


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