Stocks are climbing up again as this morning’s lighter-than-expected CPI print bolsters spirits following yesterday’s optimism sparked by tariff reprieves between Beijing and Washington.
Outlook
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Given the technical and fundamental backdrop, any initial gains could quickly fade, underscoring the importance of caution as markets navigate this significant technical and macroeconomic inflection point.
The prospects of tariffs continue to dominate investor anxiety. Effects from tariffs will be on consumers and corporations alike, with both likely sharing the brunt of higher prices.
The rally accelerated on Friday as a better-than-expected April jobs report eased some concerns about the economy’s strength.
April has been a struggle for the UK, with the country’s PMI Composite Index falling from 51.5 in the preceding month to 48.2. But even with dour consumer sentiment and a softening job market, UK growth could surprise to the upside.
Currencies of countries with the flexibility to implement fiscal or monetary stimulus in response to this shock are likely to outperform after the initial market turmoil.
The economic data for April sheds light on the potential fallout from the tariff announcements, while earnings results from the mega-cap stocks offers further insights into how severe that fallout might become.
Stocks were under pressure following comments from Fed Chair Powell, who expressed concern about the ability of the Fed to balance its inflation and employment goals given the current trade situation.
With the financial markets still wrestling with the tariff announcements from last week, one thing is still certain: uncertainty remains an integral part of the investment landscape.
Stocks ended the week with a strong gain as traders continued to focus on tariff talks while appearing to overlook upbeat news on inflation.
When you go from big, impulsive moves to these sideways, blah periods of time, it is a warning message that we are just consolidating sideways here.
The developments over recent months present a compelling narrative of potential transformation in the European financial landscape. While challenges persist, recent policy shifts, investments, and market recoveries signal a newfound resilience and optimism in the EU's economic prospects.