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In the last session of the week investors traded with optimism after April's US employment report came in lower than expected and eased concerns of higher inflation and monetary policy tightening from the Fed.

Investors traded with optimism, following upbeat corporate earnings and signs of further improvement in the labour market, with initial jobless claims in the US edging down last week to the lowest level since the start of the pandemic.

During a volatile session, stocks almost wiped out their initial gains as technology shares turned lower, offsetting optimism over solid corporate earnings and positive economic data (service ISM and ADP employment surveys).

Global stocks tumbled on Tuesday, with the tech sector in Europe suffering its biggest drop since October, mirroring a selloff on the Nasdaq (-1.9%, sharpest fall since March). The decline was driven by comments from U.S. Treasury Secretary Janet Yellen warning that interest rates may need to rise to prevent the economy from overheating.

Investors traded with cautious optimism at the start of the week, looking through the persistent threat of the pandemic while focusing instead on the relative success of the vaccine rollouts in much of the developed world.

Volatility edged up amid a bunch of economic releases on Friday. In the euro area, GDP contracted moderately in Q1 (-0.6% qoq) while inflation rose to 1.6% in April (+0.3pp) due to base effects in energy prices. U.S. consumer spending rose +4.2% mom in March as consumers received stimulus checks, and PCE core inflation advanced to 1.8% yoy.

Markets went through a mixed session as investors digested solid U.S. activity figures. U.S. GDP growth accelerated to +1.6% qoq in Q1 2021 (Q4 2020: +1.1%) on the back of stronger private consumption (+2.6% qoq), which found support on easing restrictions and fiscal stimulus. U.S. stocks advanced and yields on Treasuries nudged up.

Markets ended yesterday's session with no major movements. Risk assets gained, with commodity prices and most stock markets advancing moderately, but U.S. equities nudged down as investors eyed Biden's presentation of the $1.8trn American Families Plan – to be financed with higher taxes on the wealthy.

Investors traded in a more cautious way in yesterday's session. U.S. and euro area sovereign yields nudged up on the back of a surge in U.S. consumer confidence (the Conference Board's index rose to 121.7 points in April, its highest level since February 2020), while global stock markets were mixed.

Markets started the week on a positive note as investors eyed a heavy economic calendar in the days ahead. This morning the Bank of Japan left monetary policy unchanged, and today the Fed starts its two-day meeting. Corporate earnings reports and the release of GDP and inflation figures will also be under the spotlight in the next few sessions.

Investors ended the week in a mixed mood as they weighed increasing coronavirus cases, vaccination progress and plans for higher taxes. On Friday, global stocks were mixed, the USD weakened, and sovereign yields nudged up. Italy's peripheral spread widened modestly ahead of S&P's rating review (unchanged at BBB and a 'stable' outlook).

Yesterday investors focused their attention on the ECB meeting, which delivered no surprises, and on a report that suggested that Joe Biden's Administration would increase the capital gains rate to finance social spending. In the US, this latter driver increased volatility in stock markets and the main indices declined.