U.S. Equity Markets staged a late come back to start the first trading session of May in positive territory, led by the 1.72% gain in the NASDAQ 100. Yesterday reversed some of the negativity from Friday when the NDX lost 4.17%, ensuring that Technology had its worst month since 2008, following the release of the U.S. Federal Reserve’s preferred inflation gauge, the Bureau of Economic Analysis’ Personal Consumption Expenditures (“PCE”), showing inflation grew in March. While the figure was lower than Wall Street’s expected increase of 6.7%, it was still 6.6% higher on a year-over-year basis. The number was also above March’s downwardly revised rise of 6.3%. Meanwhile, the core reading jumped by 5.2% versus last year, lower than the forecasts and February’s increase of 5.3%. And on a month-over-month basis, the number increased by 0.9%, which was in line with estimates. This suggests that if we see inflation further pick up over the course of 2022, the economic situation may worsen. In this instance, it would signal to the central bank that more aggressive policy is needed to raise interest rates. Yesterday, we saw plenty of chop in the American Indexes. The Chicago Board Options Exchange’s (“CBOE”) volatility index (“VIX”) currently has a reading of around 32 compared with the historical average of 19.76. The high reading suggests that investors are becoming increasingly concerned about the S&P 500 Index’s future return potential, weighing on the stock market. Fuelling this uncertainty is the Federal Reserve’s upcoming policy meeting tomorrow, as Wall Street forecasts the central bank will raise the Federal-Funds target by 0.5% to 0.75%, marking its highest level since the onset of COVID-19. As a result, money managers are selling growth stocks before a potential decline to capitalise on lower prices during a downturn. Within the S&P 500, six of the 11 sectors finished higher. European Markets that were open, closed lower. Russian Foreign Ministry spokesperson Georgiy Zinoviev said he anticipates overall trade with China to increase to $200 billion by the end of 2024, fuelled by a rise in commodity exports. The Bank of England will announce its latest monetary policy update this week, and investors expect the central bank will raise interest rates by 0.25%. France’s National Institute of Statistics and Economic Studies data showed consumer spending in Europe’s second-largest economy fell in March due to increased inflation. German Foreign Minister Annalena Baerbock said Russian sanctions would be lifted only after its military has completely withdrawn from Ukraine. In Asia, China’s official composite purchasing managers’ index (“PMI”) data for April moved deeper into contraction territory, hitting its lowest level since February 2020 as COVID-19 lockdowns continue. Shanghai, China’s financial hub and home to the world’s largest container port, reported less than 10,000 COVID-19 infections for the second-straight day, signalling cases may be easing. Jibun Bank’s final Japanese manufacturing PMI figures for April increased compared with the preliminary reading due to a second-straight month of output expansion. South Korea’s export growth for April was weaker than expected, slowing versus March as shipments to Europe contracted compared with the year prior. Elsewhere, Oil rose 0.8% on news that the European Union (“EU”) will ban Russian oil, while Gold fell 1.90% on Dollar strength.
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