Market Action

• A positive start to equities this week quickly reversed course by the time markets opened on Wednesday. Low US Retail Sales prefaced poor data from China and Australia and contraction in Europe. In addition private forecasters expect US Q1 GDP growth to be revised down and show contraction
• The Eurozone’s poor growth figures have accelerated expectations of some sort of easing measures at the ECB’s next meeting in June. This week, Germany’s Bundensbank stated an openness to ECB stimulus
• High tensions in the South China Sea between China and Vietnam added further geopolitical worries in the market to go with additional European sanctions on Russia.
• US 10 yr yields reached a new low this week given geopolitical risk and subdued growth in the US and Europe
• Both the PPI and CPI demonstrated gains in April however most of the growth is due to rising food costs. Cost pressures associated with increased demand remain stagnant
• Energy markets picked up this week on news the US was debating lifting their ban on exports of crude. Such a measure would help relieve gluts in supply due to a lack of infrastructure between refineries and storage units. Libyan production also picked up this week, five months later than expected.
• Housing starts were up higher than expected and permits were at their best point since 2008. The housing market has received considerable attention for its underperformance in the US’ recovery.
• Jobless claims came in at a 7 year low
• Q1 Growth reported in Japan came in at 5.9% driven by domestic consumption as households and businesses increased purchases ahead of an increase in the national sales tax effective April 1.

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