May Commentary
GLOBAL MARKETS
Bonds and equities fall on the back of higher inflationary pressures and continuation of the war in Ukraine. Global economic outlook deteriorated as China toughened COVID-19 restrictions.
US MARKETS - US Techs impacted by negative sentiments for growth.
The annual US Consumer Price Inflation (CPI) reached 8.5%. Technology stocks suffered as the market sentiment for growth turned. Core inflation, taking out items such as food and energy, hit 6.5%, a 40-year high. Equity markets fell on the back of lower-than-expected earnings. Large tech companies were among those citing supply-chain issues and rising energy prices for missed earnings. US GDP unexpectedly declined 1.4% in the first quarter, from an expansion of 6.9% in the final quarter of 2021. Government spending fell, investment growth declined, but consumer spending remained resilient. Down -8.8% (US 500)
EUROPEAN MARKETS - The war in Ukraine still heavily impacting the region.
Equity markets were generally down but still supported by stronger than expected earnings from large blue-chip stocks. Eurozone inflation rose to 7.5% as the prolonged war between Ukraine and Russia continues to impact the supply of commodities from these two countries. The shortages have already caused prices to spike, and inflationary pressures are not likely to abate soon. Russia halted gas supplies to NATO members Poland and Bulgaria in retaliation to economic sanctions. ECB has been slow with regards to rate rises but inflation numbers are putting pressure on the central bank. Down -1.2%% (Euro 600 Index)
UK MARKETS - Inflation continues to weigh on the overall markets.
UK GDP grew 1.3% in the fourth quarter of 2021 while Manufacturing PMI fell to 55.2 in March from 58.0 in February. Earnings from Astra Zeneca, Reckitt Benckiser came in higher than expected, with both benefiting from their defensive non-discretionary properties. UK CPI rose to a 30-year high of 7.0% in March, with the biggest contributor being the rise in fuel prices. Retail sales fell in April as stores reported a fall in sales volumes, with consumers showing signs of changing their spending habits to counter the effects of rising inflation. Down -0.1% (UK All Share)
ASIAN MARKETS - Continued lockdowns in China an on-going concern
China’s hard and prolonged lockdown of businesses prompted worries about slowing demand, and commodity prices got hit as a result. China’s factory activity was also down as lockdowns impacted production. Caixin/Manufacturing Purchasing Manager’s Index (PMI) was 46 from 48.1 a month ago. A reading of below 50 indicates contraction. Down -3.5% (Asia Index)