Daily market review

United States

US shares ended Friday's volatile trading flat to slightly lower, losing an initial rally on a rate cut in China but recovering from heavier selling that emerged in mid-session. The Dow Jones, down as much a 1.9 percent, posted a fractional gain and so did the S&P 500. The Nasdaq also recovered but did close with a 0.3 percent decline.

The Dow closed the week with a 2.9 percent loss, the S&P a 3.0 percent drop, and the NASDAQ a 3.8 percent decline.

The health of the retailer sector, and what it says about consumers and inflation, remained the focus. Ross Stores swooned 22.5 percent after the discount chain cut guidance. Weekly losses for Target and Walmart came to 29.2 percent and 19.5 percent, respectively.

Foot Locker offered some good news from the retail sector, rising 4.1 percent after beating estimates. Turning to heavy equipment, Deere missed estimates and fell 14.1 percent on the session.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$0.90 to US$112.94 while spot gold rose US$3.41 to US$1,845.26. The US dollar was little changed vs. major currencies. The US 30-year bond yield fell 6 basis point to 3.00 percent while the 10-year note yield fell another 6 points to 2.79 percent.


Driven by early Friday gains on Wall Street following China's rate cut, European markets ended the week with solid gains: the Germany's DAX up 0.7 percent on the session though down 0.3 percent on the week, and the FTSE up 1.2 percent on the session but slipping 0.4 percent on the week.

Retail sales in the UK were surprisingly robust in April, up 1.4 percent on the month to all but fully reverse the cumulative decline of the previous two months. Overall inflation as tracked by the report's total sales deflator accelerated from a 9.7 percent annual rate to 10.1 percent, its first double-digit print.

Fighting against the risk that "inflation psychology" will become entrenched, Huw Pill, the Bank of England's chief economist, told an accounting group that "tightening still has further to run". The BoE has raised rates incrementally at its last four meetings in contrast to the European Central Bank, which has yet to lift off.

Producer prices in Germany continued to surge ahead in April. A 2.8 percent monthly jump was more than double the market consensus and large enough to lift the annual inflation rate from 30.9 percent to 33.5 percent, yet another new all-time high. Prices have risen every month since October 2020.

Asia Pacific

The People's Bank of China, facing an economy slowed by the country's Zero Covid policy, tripped a sharp rally across Asia after cutting its five-year loan prime rate by 15 basis points to 4.45 percent. The Shanghai Composite gained 1.6 percent while the Hang Seng climbed 3.0 percent, the latter gaining 4.1 percent on the week.

Japan's Nikkei was flat for the week going into Friday but rose 1.3 percent on the session. Consumer prices in the country surged in an April gain that did reflect high food and energy costs but was substantially skewed by the base effects of mobile-phone discounts in April last year. The total CPI more than doubled to an annual 2.5 percent with the ex-fresh food rate at 2.1 percent in gains that were expected and are likely to prove temporary.

Trading has been especially volatile in India though the Bombay Sensex, after falling 2.6 percent on Thursday, emerged with a 2.9 percent gain both on Friday and for the week. Ashok Leyland rose more than 8 percent Friday after the truck and bus maker posted strong earnings.

The All Ordinaries gained 1.2 percent on Friday and 1.1 percent on the week ahead of Saturday's voting in which Prime Minister Scott Morrison's conservative coalition is seeking a fourth three-year term against Labor opposition leader Anthony Albanese.

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