Market Action

• Equity markets in the U.S. remained subdued again this week in light of little economic data. Earnings reported this week, most notably from the retail sector, were mixed as expected. Stocks remain in a tight trading range while long-term bonds go through swings from day to day.
• Japan reported GDP for the first quarter much higher than economists had expected. The growth rate of 2.4% boosted the Nikkei but a close examination of the component data revealed that 2% of the growth was due to inventory building up. As a result, caution is still being preached for the current quarter.
• PMI data for the Eurozone followed last week’s GDP pattern: namely, stronger than expected results in several countries but disappointment in Germany. Optimism for the region’s growth is building both from private analysts and public officials.
• The United Kingdom entered into deflation according to a data release this week. The poor report combines with weak GDP data to put a lukewarm tone to the state of the economy.
• China PMI data missed expectations again, remaining in contraction. HSBC, which releases the report, explicitly cited the need for stimulus from public authorities.
• The greenback moved back into an upward motion this week. The dollar had lost ground lately to the Euro as well as the Pound. The rise in the Dollar Index kept Consumer Staples as the lagging sector this week.
• A founders meeting for the Asian Infrastructure Investment Bank concluded this week. China is reported to be the largest shareholder with up to 25% ownership in the bank followed by India at between 10%-15%.

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