Weekly Market View from Realm Investment Management. Week ending 13th May 2022.
The UK and most major European markets managed gains Friday to Friday, despite a poor start at the beginning of the week. Not so strong in the US with equity markets lower for the sixth consecutive week (even with a strong bounce on Friday); the last time that happened was 2011. Some of our sentiment readings have reached extreme negative readings indicating that a rally might be due. That would be welcome, and the strength of any such rally would offer clues as to whether the market had made a significant bottom or if another leg lower was likely.
US inflation data was the focus last week with the April CPI number coming in slightly higher than analysts expected (8.3% annually) but slowing slightly from March. Not convincing if one is looking for evidence that inflation peaked at the end of the first quarter. Markets are nervous about what lies ahead and worried that the Fed will not be able to tame inflation without causing a recession.
GDP data in the UK surprised by showing there was a contraction in the economy of 0.1% in March. The Pound fell against the US Dollar and the Yen, but rose slightly against the Euro.
In Europe, Christine Lagarde, President of the ECB, said that the central bank’s bond-buying program might end “early in the third quarter” which would be earlier than previously expected. She also hinted that an increase in rates might come just “a few weeks” later.
Market Sentiment 13th May 2022
U.S. Risk Barometer 13th May 2022
Europe Risk Barometer 13th May 2022
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