Investor attention was firmly on Wednesday’s US inflation print which showed the headline Consumer Price Index (CP) slowing to 3.4% as expected during April[1]. That broke a run of three consecutive months of above forecast releases and local equity markets were certainly buoyed by the news with the DOW Jones Industrial Average, NASDAQ and S&P 500 all topping record levels. With technology associated stocks having done most of the heavy lifting over the past eighteen or so months, returns have broadened out recently with the likes of utilities and financials all seeing positive momentum over the past month. Treasury yields also retreated, the 10-year security falling to its lowest level in over a month as investors reassessed their expectations for future interest rates.

Back across the Atlantic, the MSCI Europe ex UK index rose by +0.4% (local currency) despite losing momentum during the second half of the week. Returns in the UK were mixed with the FTSE 100 declining by -0.2% whilst the FTSE 250 advanced by +0.5%. Higher than expected wages growth may have weighed on sentiment for domestic stocks given its linkage to inflation, that factor being a key influence for the Bank of England’s and its future decisions regarding policy rates. Elsewhere, the Nikkei 225 in Japan added +1.5% despite a weak first quarter GDP print whilst in China, the Shanghai Composite was flat.

Significant moves were seen across the metals markets with copper in particular seeing strong buying activity. It jumped by more than +7.0% to $10,598 a tonne, with a short squeeze on the Chicago Metal Exchange underpinning much of that spike. The gold price also concluded the week in positive territory after a +2.0% advance took the precious metal to $2,408 an ounce. As for oil, Brent Crude was little changed at $83.67 a barrel with prices appearing to have stabilised on improving demand expectations from the likes of China and the US.

Week Ahead

Source: Refinitiv Workspace, 20/05/24

[1] Bureau of Labor Statistics – Consumer Price Index Summary. April 2024

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