Global equities slip - 31.5.2017

The broad market retreated while several technology stocks including Alphabet and Microsoft closed at record highs. Treasury yields declined yesterday despite mostly positive economic news. Consumer spending and personal income rose 0.4% in April, in line with expectations. The rise in core personal consumption expenditures was 0.2% on month, better than a 0.1% expected gain. Home price gains accelerated in March to the highest rate in nearly three years. However consumer confidence by Conference Board slipped for a second consecutive month in May, though is still near multiyear highs. Dallas Fed President Robert Kaplan, a voting member of Federal Reserve’s interest rate setting committee, said that “some correction” in the stock market could be healthy for sustaining the economic expansion. And Fed Governor Lael Brainard indicated the possibility of a rate hike “soon” as the economy is strong. Today at 13:00 CET Mortgage Applications will be released in America. At 14:00 CET Dallas Fed President Robert Kaplan will speak in New York. At 15:45 CET March Chicago Purchasing Manager’s Index will be published, the outlook is negative. At 16:00 CET April pending home sales will be released, the tentative outlook is positive. And at 20:00 CET Fed will release its Beige Book.

Bank stocks led the losses for the second day after Deutche Bank lowered banks to underweight citing the negative impact of expected slowdown in euro-zone growth on the sector. Matteo Renzi, the leader of Italy’s ruling center-left Democratic part, said it would make sense to hold election in September when a German election is planned and not after German vote. He said this would reduce uncertainty about Italy’s continued membership in euro-zone after German election vote. In economic news France’s economic growth was revised upward to 0.4% in the first quarter from a previous estimate of 0.3%. The 0.2% drop in German consumer price index was bigger than an 0.1% expected decline. And economic confidence slipped in May to 109.2 in euro-zone. German statistics department Destatis reported today retail sales for April fell unexpectedly 0.2% on month instead of an 0.4% expected growth. At 11:00 CET today final May euro-zone inflation data will come out, the outlook is negative for euro.