Market Recap: Week of May 18th 2015

Market Recap

Global equities were mixed last week after a raft of weaker than expected economic reports across the US, China and the Eurozone. Data on retail sales and industrial production from China and the US missed expectations while the flash estimate of first quarter Eurozone GDP was slightly weaker than expected. The German economy expanded by less than expected, but France and Spain led the way with more upbeat growth.

European equity markets moved lower, as the Euro moved higher against the US dollar, closing Friday at $1.14. The US dollar has declined sharply over the last six weeks as weaker US economic data has pushed out the timing of Fed rate hikes. The major US equity indices were marginally higher over the week. Japan’s Nikkei 225 index closed up 1.83%, while Chinese equities boosted by the decision from the People’s Bank of China to cut interest rates further. The German 10-Year government bond yield closed at 0.63%.

Week Ahead

European equity markets have opened higher this morning despite a weak session in Asian markets overnight.

Key macro data for the week ahead includes flash global PMI surveys from the U.S., China and the Eurozone. Recent economic data has signalled a loss of momentum in the global recovery. There is a raft of data from Japan this week, including the preliminary estimate of first quarter GDP growth. There is also GDP data from the UK and Germany with no revisions to the preliminary estimates expected.

The Bank of Japan will meet on Friday with no change to monetary policy expected. The Bank of England and the US Federal Reserve will release the minutes from their most recent monetary policy meetings, providing further insight into the views of the committee members, with no rate hikes imminent.  A number of Fed governors are also on the speech circuit.