Weekly Market Review - May 1-10
US stock market departed from its record peaks, with companies like Boeing and Facebook being surrounded by negative news, while US-China trade talks are shaken by threats and US tariff hike on Chinese goods.
In the commodity sector, Brent and WTI oil brands are trading relatively at the same level where they started the week. Gold and silver are slightly up, driven by Brexit uncertainty and trade war risks.
In the cryptocurrency industry, Bitcoin exceeded the $6,000 level for the first time this year.
Here are other major economic updates that moved the markets:
US Goods Trade Deficit With China Declines
In March, the US goods trade deficit with China narrowed to its lowest level in five years. The indicator is quite relevant in the context of the US government’s “America First” rhetoric. On Thursday, the Commerce Department said that the goods trade deficit with China fell in March 16.2% to $20.7 billion, as imports from the Asian economy declined by 6.1% while exports to China surged 23.6%. The update comes amid active trade negotiations between the two economic giants.
China’s Inflation Surges to Six-Month High
The growth of China’s consumer price index (CPI) accelerated to a six-month high last month, as the inflation was driven by rising pork prices. On Thursday, data from the National Bureau of Statistics showed that the CPI rose last month 2.5% in annual terms, up from 2.3% in March and in line with analysts’ expectations. In April, pork prices rose 14.4% year-on-year and 1.6% compared to March. Economists expect pork quotations to be on an uptrend until at least the last quarter.
US Jobless Claims Fell Less Than Expected
The number of US citizens looking for unemployment benefits declined less than anticipated last week, which worries economists that the robust labor market might bend. On Thursday, the Labor Department announced that the initial jobless claims fell 2,000 to 228,000 for the week ended May 4. Analysts on average expected a decline to 220,000. The monthly moving average, which is a more accurate measure, increased last week by 7,750 to 220,250.
US PPI Slightly up
US producer prices index (PPI) demonstrated a slight increase last month, though general inflation pressures are becoming more visible. On Thursday, the US Labor Department announced that the PPI index rose 0.2% in April after surging 0.6% in March. In the 12 months through April, the index added 2.2% - the same reading as in March. The performance was mostly in line with analysts’ expectations, though they expected annual growth of 2.3%.
World Food Prices Gain 1.5% For The Month
The Food and Agriculture Organization (FAO), the food agency of the United Nations (UN), said on Thursday that world food prices rose last month 1.5%, as a surge in dairy and meat quotations offset the decline in cereal prices. Speaking about cereals, the FAO expects a record output this year, after a drop in 2018. In April, FAO's food price index, which monitors monthly changes of cereals, oilseeds, dairy products, meat and sugar, was 170.1 points against 167.5 points recorded in March, which is the highest level since June 2018.
German Industrial Output up 0.5% in March
The German Statistics Office said on Wednesday that the domestic industrial output rose in March 0.5% in monthly terms, which took economists by surprise, as they expected a 0.5% decline. The good performance was driven by increased production of consumer and intermediate goods, providing some hope for the eurozone’s largest economy, which is currently affected by the trade war talks and Brexit uncertainty. The February figure was revised down, from an initial+0.7% reading to +0.4%.
Upcoming News to Watch
Next week, the market will pay close attention to the development of US-China relations.
On Wednesday, the US will publish its retail sales index changes both in monthly and annual terms.
Several important updates will come from the eurozone, which will release quarterly GDP and employment data on Wednesday while on Friday will report on inflation.
On Monday, the Hong Kong markets will be closed as it will be the day following the Buddha’s Birthday.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.