Emmanuel’s Europe on the mend
European stocks continue to hold their ground, supported by a record $6bn injected into European stock funds this past week. French president-elect Emmanuel Macron has put together a hotch-potch list of 428 candidates for his En Marche! party. Many of Macron’s candidates have never held office and this may improve the chance of election with France’s disgruntled voters - and the likelihood of economic reform once in office.
FTSE awaits manifestos next week
The UK General Election continues to be a boost to the FTSE 100 which has been tip-toeing higher for the past two weeks. The UK may also be benefiting from renewed investor confidence in Europe. Whether we reach a record high next week could depend on the release of party manifestos. Labour’s leaked proposals to re-nationalise some key British industries lowers the bar for how business-friendly the Conservatives need to be. The Conservatives are scheduled to release theirs on Monday (15th May).
Pharmaceutical companies top and tailed the FTSE on Friday. AstraZeneca (LON:AZN) was the standout performer after reporting a successful cancer drug trial. Hikma (LON:HIK) shares were still floundering following the delayed approval of its new asthma drug.
US stocks open lower
Stocks on Wall Street opened slightly lower with tech sector gains weighed down by losses amongst financial shares. The political fallout from Donald Trump firing FBI Director Comey has meant less interest in the financial sector, thought to be one of the biggest beneficiaries of deregulation under the new president.
We are ending another week with stocks at record highs and volatility at rock bottom. This week was notably good for the tech-heavy NASDAQ Composite as Apple (NASDAQ:AAPL) topped a market cap of $800bn for the first time. Things are very calm right now – and that’s typically what happens before the next panic.
Pound struggles following BoE
A lack of UK economic data on Friday meant currency traders will still reacting to more modest inflation forecasts from the Bank of England, sending the pound lower. A bout of dollar strength this week was probably the main reason GBP/USD was unable to takeout the big 1.30 level.
The dollar capped one of its best weeks of the year with losses on Friday after data showed the softest retail sales growth of 2017. A June US rate hike still looks odds on but the Fed’s belief that the economic growth slowdown in the first quarter was “transitory” is going to hold a lot less water if Q2 goes the same way.
Some commodity stability
The recent market stress in the commodity space eased further on Friday, helped by talk of a revamped US-China trade deal. Silver, which has been decimated this month, hit a 5-day high. Brent crude held above $50 per barrel. A fall in US inventories and renewed hopes that OPEC and non-OPEC nations will extend output cuts has helped oil carve out a temporary bottom.
Increasingly it feels like the issue for crude may not be supply so much as demand. Chinese economic data has been slowing alongside a tightening of Chinese monetary policy. Whether commodity onslaught picks up pace again next week may depend on the next series of China data on tap.
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