Daily market review

US recovers sharp losses; China rate cut fuels rallies in Asia, Europe

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.

Europe

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.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information.  You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. The Target Market Determination (TMD) for Fidelity Australian product(s) can be found at www.Fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise.

© 2022 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

Share: