Global equity markets ended mostly lower last week, following the US President, Donald Trump’s decision to cancel the nuclear summit with North Korea. UK markets finished mixed during the week. On the data front, UK’s annual consumer price index (CPI) advanced at a slower-than-expected pace in April. Additionally, the annual producer price index rose less than market anticipations in the same month. Moreover, the CBI total trend orders declined in May, reaching its lowest level since November 2016. Further, UK’s gross domestic product (GDP) expanded at par with market forecast in 1Q18, marking its weakest growth since end of 2012, while retail sales climbed to an 18-month high level in April. European markets ended the week on a negative footing, led by losses in banking, and energy sector stocks. On the macro front, the Eurozone’s manufacturing PMI declined to a 18-month low level in May. Additionally, the services PMI registered an unexpected decline in the same month. Moreover, the consumer confidence index unexpectedly fell in May. Separately, Germany’s Markit manufacturing PMI recorded a more-than-anticipated drop in May, reaching its lowest level since February 2017. Further, the Markit services PMI fell unexpectedly in May, recording its lowest reading since September 2016. US markets ended higher last week, after the Federal Reserve's (Fed) meeting minutes signalled at a gradual interest rate increase. Data indicated that the US manufacturing PMI surprisingly rose in May, notching its highest level since September 2014. Further, the Markit services PMI jumped to a three-month high level in the same month. On the contrary, the nation’s MBA mortgage applications recorded a decline in the week ended 18 May 2018, marking its lowest level since December 2017. Moreover, durable goods orders slid more than market forecast in April. Additionally, the Michigan consumer sentiment index unexpectedly eased in May. Asian markets ended weaker last week.


Currency Update


The EUR ended lower against the USD, amid heightened political crisis in Italy. The British Pound ended weaker against the greenback, after the UK's annual inflation unexpectedly slipped to a 13-month low in April. The US Dollar ended weaker against its major counterparts last week, after the US President, Donald Trump cancelled the country’s nuclear summit with North Korean leader, Kim Jong Un.



Fed minutes: Officials on track to raise interest rates
in June, comfortable with inflation briefly running
above its target


The Federal Open Market Committee's May meeting minutes reported that the US Fed is on track to increase the benchmark interest rates again at its June meeting if the economy evolves as anticipated. Further, it indicated that officials would tolerate inflation rising above its 2.0% target for a “temporary period”. However, officials expressed concerns over the fallout from the Trump administration’s trade policies on the US economy.



The Week Ahead


Ahead in this week, market participants will closely watch the Fed’s Beige Book survey, GDP, consumer confidence index, ADP employment change and advance goods trade balance data from the US along with UK’s GfK consumer confidence index, mortgage approvals and Markit manufacturing PMI for further indication. Additionally, the Eurozone’s unemployment rate, CPI, Markit manufacturing PMI, economic and consumer confidence index along with Germany’s unemployment rate, CPI and Markit manufacturing PMI will be on investors' radar.



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