European indices grow on the ECB’s “dovish” position. Quarterly reports of mega-companies support the broad market

US personal spending for March rose by 0.8% m/m, stronger than expectations of 0.6% m/m. Personal income for March rose by 0.5% m/m, which aligns with expectations. The US core PCE deflator for March, the Fed’s preferred measure of inflation, came in at 2.8% y/y, unchanged from February and above expectations of 2.7% y/y. The University of Michigan Consumer Sentiment Index for April was revised down 0.7% to 77.2, weaker than expectations of no change at 77.9.

The Eurozone M3 Money Supply for March grew more than expected, which is negative for the euro. March 1-year ECB inflation expectations fell to 3.0% from 3.1% in February, the lowest in two years. However, March’s 3-year inflation expectations were 2.5%, unchanged from February’s and above expectations of 2.4%. Swaps estimate the ECB’s chances of a 25 bps rate cut at its next meeting on June 6 at 88%. This is a growth factor for the European indices.

WTI crude oil prices fell to around $83 a barrel on Monday, recouping some of last week’s gains. High US inflation further undermined sentiment around interest rate cuts, worsening the demand outlook. Investors now await the US central bank’s monetary policy decision this week, which is expected to keep borrowing costs at current high levels. The latest US PCE inflation data strengthened the dollar, increasing oil prices as dollar-denominated commodities become more expensive for buyers holding other currencies.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 1.86%, China’s FTSE China A50 (CHA50) gained 2.06% for the week, Hong Kong’s Hang Seng (HK50) jumped by 7.56% for the week, and Australia’s ASX 200 (AU200) was negative 0.87%.

The Japanese yen strengthened 2% to 155 per dollar on Monday after falling to 160.2 earlier in the session. Markets saw this as a possible government intervention as Japanese banks are reportedly actively dumping dollars. Traders have been on alert for a possible intervention by Japanese authorities for some time as the yen has slumped to 34-year lows and lost more than 10% against the dollar this year.

Vietnam’s annual inflation rate rose to 4.4% in April 2024 from 3.97% in the previous month. This was the highest inflation rate since January 2023, with food prices rising the most in eight months (4.32% vs. 4.05% in March).