The US stock market, which accounts for two-thirds of the global stock market, rose 4.3% in euros this week as the large-cap S&P 500 broke a streak of seven consecutive weekly declines, writes Ian Slattery.
Every sector of the S&P 500 rose, appearing to reflect optimism that inflationary pressures may moderate.
European stocks also hit a three-week high as confidence grew that inflation could peak and central banks signaled that interest rate hikes are likely to be gradual.
Minutes from the Federal Open Market Committee’s May meeting were released this week; the main takeaway from the minutes is that a second straight 50 basis point hike in June looks increasingly likely.
Initial S&P Global Flash US PMI data fell to 57.5 in May from 59.2 in April (PMI readings above 50 indicate expanding activity.) Final releases of global PMI and the ISM for May will be eagerly awaited next week, providing an important influence on investor sentiment.
The first week of June also brings the US Labor Market Report, a key economic indicator, on Friday. Core Eurozone bond yields fluctuated on mixed reports, but ended slightly higher this week.
Yields initially rose after European Central Bank (ECB) President Christine Lagarde advocated a gradual approach to monetary tightening. Yields retreated somewhat as Eurozone PMIs recorded a slight decline, suggesting a slight loss of momentum.
Global equities rose 3.3% in euros and 3.7% in local terms last week. Year-to-date, global markets are down -7.2% in euros and -12.6% in local terms. The US market, the largest in the world, grew by 4.3% in euros and 4.7% in local terms.
Fixed Income and Foreign Exchange
The US 10-year rate ended at 2.74% last week. The German equivalent finished at 1.04%. The yield on Irish 10-year bonds ended at 1.63%. The euro/US dollar exchange rate finished at 1.08, while the euro/GBP finished at 0.85.
Oil ended the week at $115 a barrel and is up 62.5% year-to-date in euros. Gold ended the week at $1,858 per troy ounce and is up 7.3% year-to-date in euros. Copper ended the week at $9,454 per ton.
The week ahead
tuesday 31 may
Eurozone consumer price index data released
wednesday 1st June
May ISM manufacturing and services data released
friday 3rd June
May US Non Farm Payroll report released
About: Zurich Investments
The team at Zurich Investments is a long-established and highly experienced team of investment managers managing approximately €31 billion in investments with pension assets of €18.4 billion. Learn more about Zurich Life funds and investments here.
The Zurich Investments team is a long-established and highly experienced team of investment managers managing approximately €31 billion in investments, with pension assets of €18.4 billion. To learn more about Zurich Life funds and investments, w: zurichlife.ie/funds,