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In yesterday’s session investors' sentiment improved modestly ahead of today's Federal Reserve meeting, where we expect interest rates to be hiked by 0.25pp. Oil prices declined after lockdowns in China were announced, since that might dampen oil demand, and the barrel of Brent fluctuated below $100.

Investors traded with a risk-on sentiment on Tuesday, still waiting for more information about the ongoing talks between Russia and Ukraine and digesting hawkish signals from central bankers, with various Fed officials supporting a more aggressive normalization of policy interest rates.

Investors ended the week with mixed results, balancing out a solid employment report in the US (payrolls rose by 431.000 in March and the jobless rate fell to 3.6%) with upside surprises in inflation in the eurozone (HICP went up by 7.5% y/y in March). Ongoing talks between Russia and Ukraine also remained in focus.

Sentiment deteriorated across financial markets on Wednesday, as investors digested the hawkish narrative in the accounts of the Fed’s latest meeting and the likely new imposition of sanctions against Russia.

Investors ended the week with cautious optimism, with equity indices rising across Europe and emerging markets but with mixed results in the US. Bank shares continued to outperform, reflecting expectations of a more aggressive interest rate normalization in advanced economies.

In yesterday's session, investors traded with mixed optimism as they continued to digest inflation data for the US, which might have peaked in March. On monetary policy, the Bank of Canada hiked rates by 50bp to 1% and said it would allow bonds to roll off as they mature. Today's focus will be on the ECB meeting.

Investors started the week with no clear direction, as traders digested mixed signals from the GDP data in China and corporate results in the US. Financial markets were closed across Europe, Australia and Hong Kong.

Financial markets started the week with mixed results, as investors weighted out positive corporate earnings results with downward revisions in the growth economic outlook and a new round of hawkish commentary by some Fed officials (Charles Evans from the Chicago Fed and James Bullard from St. Louis).

Volatility continued to rein in financial markets on Wednesday, as investors took on board hawkish comments from central bank officials and the decision by the Chinese authorities to keep the benchmark lending rates unchanged.

During a volatile session, markets closed with mixed results, as investors digested a mix of hawkish comments by central bank officials, upbeat corporate earnings reports, positive macro data (e.g. consumer confidence in the eurozone) and a good showing by incumbent French President Macron at a TV debate against FN Le Pen.

In the last session of the week, better-than-expected PMI data failed to boost sentiment, as investors remained focused on feeble corporate results and on the hawkish shift from central banks. On Sunday, Emmanuel Macron won the second round of the French Presidential elections with 58.6% of the votes.

In yesterday's session, investors traded with an optimistic tone amid better-than-expected corporate results and despite the contraction of the US GDP in Q1 (-1.4% QoQ SAAR from 6.9% in Q4), which was affected by the change in inventories and a drag from net exports, while domestic demand remained strong. 

On Friday, investors digested key economic data releases in the euro area: GDP growth in Q1 decelerated from 0.3% to 0.2% and inflation ticked up from 7.4% in March to 7.5% in April. Nevertheless, the focus of the inflation figures was on the core index, which rose from 2.9% to 3.5% in a sign that inflation is rising across all the components.

Investors traded under a cautiously optimistic mood on Tuesday, waiting for the outcome of the Federal Reserve meeting to be announced today. Consensus expectations look for a 50 bp hike in the policy rate as well as details of the plan to reduce the central bank’s balance sheet.

On Friday, investors focused their attention on the April employment report for the US, which confirmed that the tight labor market should allow the Fed to continue hiking interest rates. The expectation of a tighter monetary policy led to increases in the yields of sovereign bonds and volatility in stock markets.

In the first session of the week, investors' sentiment deteriorated amid concerns on whether the ongoing withdrawal of monetary policy accommodation will be able to tackle inflationary pressures without leading to a recession.

In yesterday’s session traders searched for safe-haven assets, following weak economic data and hawkish comments from some ECB members, arguing in favor of a 50bp hike in the policy rate in July.

Inflation and monetary policy continued to center financial markets’ stage in yesterday’s session. Euro area HICP surprised again to the upside and reinforced the views of those in the ECB Governing Council pushing for a 50bp interest rate hike in July.

Investors traded cautiously on Wednesday, amid persisting worries about high inflation and slowing economic growth, and ahead of the crucial ECB meeting today. We expect the ECB to confirm the end of net asset purchases in early July and to signal the start of a hiking cycle in the policy rates thereafter.

Financial markets started the week with another sell-off session in which traders increased their demand for safe-haven assets. The higher-than-expected US inflation reading is still weighing on sentiment and investors raised their bets for a 75bp interest rate hike from the US Federal Reserve this Wednesday.