Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
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.
Risk-aversion returned to the fore during a volatile session on Thursday, as investors continued to digest recent monetary policy decisions by central banks (Fed, BoE) and took on board disappointing economic data (e.g. the fall in factory orders in Germany and the uptick in new jobless claims in the US).
In line with expectations, the Federal Reserve raised its policy rate by 50 bp to the 0.75-1.00% range and confirmed a plan to reduce the size of its balance sheet (with a monthly cap of $95 billion). The Fed chair Powell noted that the recovery could withstand tighter monetary policy but also ruled out more aggressive rate hikes of 75 bp.
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.
Volatility continued to dominate across financial markets at the start of the week, as investors took position ahead of the Federal Reserve meeting staring today and following the release of feeble economic sentiment data (final manufacturing PMIs). EU leaders were still evaluating a new round of sanctions against Russia.
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.
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.
Volatility continued to dominate across financial markets in yesterday's session, with the key drivers being mixed earnings reports, the expectation of a tighter monetary policy from the Fed and the ECB, uncertainty surrounding the economic effects of the war in Ukraine and lockdowns in China.
In yesterday's session, investors' sentiment deteriorated amid the expectation of a tighter monetary policy from the Federal Reserve and the ECB and disappointing corporate results. Concerns about the Covid-19 situation in China added to the somber sentiment.
Investors started the week trading with a risk-off mood following the announcement of lockdowns in several parts of Beijing. In this context, stock indices declined in the euro area and in emerging economies while late trading in the US, boosted by dip buyers, led the S&P 500 and the Nasdaq to advance.
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.
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.