Global equity markets ended firmer last week, following robust earnings reports in the US and Eurozone. UK markets finished the week in positive territory, supported by gains in the energy and consumer sector stocks. Data showed that Britain’s gross domestic product (GDP) contracted to a five year low in the first quarter of 2018. Moreover, the nations’ GfK consumer confidence registered an unexpected decline in April. Meanwhile, public sector borrowing posted a surplus in March. Additionally, the Nationwide house price index rebounded on a monthly basis in April. European markets ended the week on a stronger footing, amid upbeat corporate results. On the macroeconomic front, the Eurozone’s manufacturing PMI fell more than market expectations in April, reaching its lowest level in seventeen months, while the region’s services PMI surprised with a rise in the same month. Furthermore, the business climate indicator unexpectedly advanced in April. Separately, Germany’s unemployment rate remained steady in April, marking its lowest level since the beginning of the data series in January 1992. Further, the nation’s services PMI unexpectedly climbed in the same month. US markets ended mostly higher last week. On the data front, the US Richmond Fed manufacturing index unexpectedly plunged in April. On the contrary, the nation’s GDP advanced more than market forecast in 1Q18. Additionally, the Markit manufacturing PMI surprisingly jumped to a three-and-a-half-year high level in April. Further, the Markit services PMI recorded a more-than-anticipated rise in the same month. Asian markets ended mostly firmer last week, extending their gains for the second consecutive week.


Currency Update


The EUR ended lower against the USD, after the European Central Bank (ECB) Chief, Mario Draghi, kept the key interest rates steady. The British Pound ended weaker against the greenback, after UK’s economy expanded at its slowest rate since 2012 in the first three months of 2018. The US Dollar ended stronger against its major counterparts last week, after the US economy grew more than market expectations in 1Q18.



ECB holds key interest rates steady


The European Central Bank (ECB), at its April monetary policy meeting, decided to keep the benchmark interest rates unchanged at 0.0%, amid signs that Eurozone’s growth outlook may have softened. In a statement post-meeting, the ECB President, Mario Draghi, argued that growth in the common currency region remained strong but acknowledged evidence of a “moderation” in the exceptional growth pace seen last year. Further, the Governing Council remained confident that underlying strength in the economy will help inflation converge towards the central bank’s 2.0% target in the near-term.



The Week Ahead


Going ahead this week, market participants will keep a tab on a flurry of economic releases in the US which includes trade balance, labour market data, Markit manufacturing and services PMI data. Also, the FOMC interest rate decision will garner significant market attention. Additionally, the Eurozone’s GDP, unemployment rate, consumer price index, producer price index, manufacturing and services PMI along with UK's Markit manufacturing and services PMI, net consumer credit will be on investors' radar.



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