The EU's compromise on the oil embargo against Russia drove oil prices at times to their highest level in more than two months. On the New York Stock Exchange, the stock indices after a holiday on Tuesday, started with losses in the new trading week. The Dow Jones Industrial closed -0.67% from Friday's close at 32,990.12 points and the S&P 500 fell -0.63% to 4,132.15 points. Under pressure came mainly commodity stocks, especially oil companies such as Chevron or ExxonMobil, which is likely to be explained in part by profit-taking. On the Nasdaq technology exchange, the indices posted interim gains, but could not hold these until the end and went out of trading with moderate daily losses of around -0.3%. Thus, the tech indices closed the merry month of May with a minus of about -1.7%.
In Asia, the stock markets trended without a clear trend. In Tokyo, the Nikkei 225 traded around +0.5% higher, while the Hang Seng in Hong Kong was about -0.75% lower than on Monday. Positive news was reported from the metropolis of Shanghai, where after two months of lockdown the restrictions were largely relaxed. On the other hand, the Purchasing Managers Index for China's industry in May signaled the third month in a row a contraction, respectively, a growth slowdown. The Caixin PMI slipped from 48.1 to 46.0 points, which also roughly mirrors the government's official purchasing managers' index.
Meanwhile, in the US, consumer sentiment dimmed somewhat less than expected. In view of high inflation, rising interest rates and fears of recession, the consumer confidence barometer of the New York-based institute The Conference Board fell in May from 108.6 in the previous month to 106.4 points (consensus 103.6). Both the assessment of the current situation and the expectations of the private households surveyed deteriorated.
In the eurozone, consumer price inflation rose again to a record level in May. Year-on-year, the inflation rate climbed to +8.1% from +7.4% in April. Analysts had forecast an increase to +7.8% on consensus. The main driver remains the skyrocketing energy prices, but the upward price trend seems to be becoming increasingly broad-based and is thus likely to put the European Central Bank (ECB) under increasing pressure to counter inflationary pressure with an interest rate turnaround soon.
In France, the cost of living rose by +5.8% year-on-year in May, the fourth month in succession. Inflation in the second-largest economy in the eurozone thus reached its highest level since the introduction of the euro in 1999. Nevertheless, the inflation rate in France is still well below that in the euro zone and in Germany, where consumer prices rose by +8.7% year-on-year in May.
According to revised data, the French economy contracted by -0.2% at the beginning of the year compared with the previous quarter. An initial estimate had still pointed to stagnation on a quarterly basis. Private consumption was particularly weak (-1.5%). In the final quarter of 2021, the second-largest GDP in the eurozone had still grown by +0.4%. Things were somewhat better in Italy, where GDP surprisingly increased by +0.1% in Q1. An initial survey had still predicted a decline in economic output of -0.2%. In Italy, too, private consumption weakened.
Despite the increase in financing costs in the meantime, prices on the US housing market continued to rise on average. According to the S&P/Case-Shiller index, house prices in the 20 largest cities in the US rose by +21.2% over the year in March – the strongest increase since the start of the data series around 35 years ago. Compared with the previous month, an increase in prices of +2.4% on average was observed. However, in view of higher mortgage rates and further monetary tightening by the Federal Reserve, price momentum in the US housing market is likely to weaken soon, commented S&P.
|03:45||China||Caixin PMI Manufacturing (May)||46.0|
|08:00||GE||Retail sales (April, y/y)||-2.7%|
|16:00||US||ISM Manufacturing (May)||55.4|
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Source: LGT Bank (Switzerland) Ltd.
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