US futures
Dow futures 0.2% at 42324
S&P futures 0.01% at 5918
Nasdaq futures 0.4% at 21300
In Europe
FTSE 0.53% at 8597
DAX 0.1% at 23568
- Stocks jump strongly across the week
- US consumer confidence plunged to a record low
- US inflation expectations rise to the highest level since 1981
- Oil steadies but is set to gain across the week
Stocks rise firmly across the week
U.S. stocks are subdued today but have gained strongly across the week due to the de-escalation of the US-China trade war and cooling inflation. At the same time, investors shrugged off souring consumer sentiment.
The market has broadly brushed off data showing that US consumer sentiment fell to a record low. Meanwhile, year-ahead inflation expectations are at the highest level since 1981. While inflation expectations were elevated, current inflation continued to cool.
Data this week showed that US CPI eased to 2.3% YoY in April, and PPI fell by the most in five years, helping to calm fears over the inflationary impact of tariffs. However, it is still early days, and hard data could still deteriorate over the coming months. Still, for now, worst-case tariffs have been avoided, and data shows few signs of cracks, keeping the mood buoyant.
With the improved picture, Barclay no longer sees the US economy slipping into recession this year.
Meanwhile, in the latest development, Trump announced that the US would set tariff rates for other nations in the coming weeks, as it has been impossible to negotiate with all countries.
Corporate news
Constellation Brands is rising over 3% after Berkshire Hathaway doubled its stake in the beer importer. Buffett's position is now worth $2.2 billion.
Novo Nordisk is falling 5% after the CEO announced he would step down due to recent market challenges. He will remain in his position while NOVO searches for a replacement.
Dow Jones forecast – technical analysis.
The Dow Jones’ recovery from 36,550 has run into resistance at the 200 SMA at 42,400. The RSI is above 50, supporting further upside. A break above the 200 SMA could see the price extend gains towards 42,850, the March 26 high. Failure to rise above the 200 SMA could see sellers test 41,900 and opens the door to 40,500, with a break here creating a lower low. 42,850, the March 26 high.
FX markets – USD rises, EUR/USD falls
The USD is rising following rising inflation expectations. The US dollar index is set to gain 0.45% across the week, marking its fourth straight weekly rise. News of the US-China trade truce and deals in the Middle East have helped lift USD demand.
The EUR/USD is falling but is on track to fall 0.45% across the week, marking the fourth straight weekly decline. Dovish expectations surrounding the ECB is keeping pressure on the EUR.
GBP/USD falls amid a stronger USD and stronger-than-expected UK GDP growth and solid wage growth data this week. These data support the view that the Bank of England will remain cautious about cutting rates.
Oil rises across the week despite oil supply concerns.
Oil prices are holding steady after two days of losses, but are still on track to post gains across the week.
Concerns over oversupply saw oil prices fall by over 2% on Thursday. Progress in the US-Iran nuclear deal raised the prospect of rising global crude supply.
However, the fall was insufficient to knock oil prices lower across the week. Instead, oil was supported by optimism about the US-China trade truce.
Data this week showed that global crude stocks increased by 3.5 million barrels in the US, and OPEC held its demand growth estimate at $1.3 billion a day.
