🐮🐻 #4: Equity markets take a breather while macro data prints largely as expected

One-liner: UK economy ‘grows’ and Fed pauses rate hikes, as expected. Stocks remain broadly flat, with the exception of China where quantitative easing is driving up equity valuations.

📰 What’s moving markets?

• The UK economy (GDP) ‘grew’ by 0.2% in April, and more broadly GDP has grown 0.1% over the past 3 months to April. The FTSE 100 was similarly muted on the news, up 0.1% on the day and 0.64% ytd.

• After 10 consecutive rate hikes, the Fed has paused base rate as expected (but signaled the likelihood of more rate rises to come). US equity markets were flat for the day and volatility (VIX) fell 5%.

• New Zealand dips into a technical recession as GDP drops 0.1% for the second consecutive quarter. Inflation remains high in the country, currently tracking at 6.7%.

• China’s economy growth is slowing with retail sales rising 12.7%, below analyst expectation of 13.6% and a significant decline from April’s 18.4%. Industrial output grew 3.5% in May (expectations: 3.6%, last: 5.6%). In response to the slowing economy and in line with expectations, China’s central bank cut its one-year medium-term lending facility rate by 10 basis points to 2.65% today. Stocks responded positively with the CSI 300 up 1.4% today.

📊 Chart of the day

We are currently in a ‘cardboard box recession’ with shipments dropping to lows last seen during the Global Financial Crisis.

Industry shipments or corrugated boxes

📅 Coming up this week

Monday 12th June

• India CPI expected: 4.42%, last: 4.70%, actual: 4.25%

Tuesday 13th June

• UK Average Earnings ex Bonus expected: 6.9%, last: 6.7%, actual: 7.2%

• German CPI expected: 6.1%, last: 6.1%, actual: 6.1%

• US CPI (core) expected: 5.3%, last: 5.5%, actual: 5.3%.

Wednesday 14th June

• UK GDP expected: 0.3%, last: -0.3%, actual: 0.2%

• US PPI (core) expected: 2.9%, last: 3.2%, actual: 2.8%

• US Fed Interest Rate Decision expected: 5.25%, last: 5.25%, actual: 5.25%

• Australia Unemployment Rate expected: 3.7%, last: 3.7%, actual: 3.6%

• China Retail Sales expected: 13.9%, last: 18.4%. actual: 12.7%

Thursday 15th June

• Russia GDP (quarterly) expected: -1.9%, last: -2.7%

Friday 16th June

• Euro Zone CPI (core) expected: 5.3%, last: 5.3%

• Euro Zone wages expected: 3.3%, last: 5.1%

• Japan BoJ Interest Rate Decision expected: -0.1%, last: -0.1%

📈 The markets at a glance