Europe recovers, Wall Street turns lower again
Stock markets in Europe racked up solid gains today as the bullish close in Asia helped the mood. Overnight, the Chinese authorities cut the mortgage lending rate by a relatively large amount in a bid to assist the economy on account of the Shanghai lockdown. Equities jumped in the Far East and that fed through to Europe. US equities got off to a positive start, but the bullish run didn’t last long and now they are in the red again. In keeping with recent trends, the NASDAQ 100 is leading the declines as it is down 1.1%, while the S&P 500 is 0.9% lower.
Sterling is doing reasonably well thanks to the solid UK retail sales numbers, the report showed 1.4% growth in April, which was a welcomed change from the -1.2% fall seen in March, and it comfortably topped the -0.3% forecast. It is encouraging to see that consumers in the UK are happy to spend money in this environment as there is growing chatter about a cost-of-living crisis. Earlier this week it was confirmed that wages in Britain are growing by 7%, but CPI is now 9%, so it is possible that shoppers might curtail their activity in the months ahead as the sharp rise in bills could take its toll.
The US dollar has pulled back a little of the ground it lost yesterday. This time last week, the greenback printed a new multi-year high, but in came under major pressure mid-week as some of the heat was taken out of the currency. It is up 0.2% today, and it remains in the broader uptrend. As a result of the firmer greenback, EUR/USD has retreated for the near two-week high it posted yesterday.