Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Financial markets closed with mixed results on Wednesday. On one side, inflation data in the US suggested upside pressures in core prices are moderating while, on the other, ECB officials reiterated the need for further policy tightening. Today, the Bank of England unveils its monetary policy decisions.
Risk aversion returned to the fore during a volatile session on Tuesday, with weak trade data in China resurging fears of a global economic slowdown and as there were no clear progress during the first talks between Democrats and Republicans to try to resolve the US debt ceiling standoff. Today the focus turns to the US CPI inflation data for April.
Investors started the week trading with a more cautious approach, with sentiment negatively impacted by weak industrial data in Germany (–3.4% m/m in March, well below expectations) and signs of tightening credit conditions in the US, according to the Fed’s Senior Loan Officer Opinion Survey.
Investors closed the week trading with more appetite for risk, taking on board another upside surprise in labour market data in the US and easing financial pressure in the country’s regional banks.
In yesterday’s session, the focus was still on monetary policy decisions, as the ECB decided to raise the official interest rates by 25 bp (depo and refi rate at 3.25% and 3.75%, respectively). Despite lowering the pace of rate increases, Lagarde clearly signaled that the ECB cannot pause rate hikes yet as inflation is still too much elevated.
Yesterday’s Federal Reserve meeting resulted as a nonevent for financial markets as the 25bp rate increase to the 5.00%-5.25% target range was 100% priced in. Also, the removal of an explicit reference in the press release of further interest rate increases in the coming meetings was consistent with the expectation of a pause in the hiking cycle.
In yesterday's session, investors traded with a risk-off mood amid concerns on the US debt ceiling and clearer signs that the US labor market is cooling down. In particular, job vacancies in March declined by 400k to 9,590k, the lowest level since April 2021.
In yesterday’s session, investors reacted to the acquisition of First Republic Bank by JP Morgan, after the US government asked the biggest US bank to do so, according to the press note released by the bank. European financial markets were closed because of the May 1st holiday. Trading happened only in the US, Japan, and some emerging economies.
A more risk-on session was recorded across global markets on Thursday, as investors balanced out positive signals from corporate earnings results in the tech sector with mixed US economic data.
Investors continued to err on the side of caution on Wednesday, taking position ahead of the release of the Q1 GDP flash estimates for the US today and across the eurozone tomorrow.