The Majors

It was a bullish week for the European majors in the week ending May 27, 2022.

The EuroStoxx600 rose by 2.98%, with the CAC40 and the DAX seeing gains of 3.67% and 3.44%, respectively.

Economic data and market sentiment towards Fed monetary policy delivered support in the week.

Market angst over the threat of a recession eased, with economic data from the US showing robust consumer spending in April. Adding support was softer inflation figures at the end of the week.

On Wednesday, the FOMC meeting minutes were also market-friendly, with the minutes suggesting the Fed may take its foot off the gas in the coming months.

From the ECB, ECB President Christine Lagarde talked of an end to negative rates but not much more, which was also market positive.

The Stats

It was a busy first half of the week, with German business and private sector PMIs in focus.

The stats were market positive, with German business sentiment and German manufacturing sector activity delivering support.

Germany’s ifo Business Climate Index increased from 91.9 to 93.0 in May. The manufacturing sector PMI rose from 54.6 to 54.7, according to prelim figures.

For France and the Eurozone, however, the private sector numbers were market negative.

The Eurozone manufacturing PMI fell from 55.5 to 54.4, with the composite declining from 55.8 to 54.9.

Mid-week, German GDP and consumer climate figures failed to impress, with consumer sentiment still weak in June. The second estimate GDP numbers were in line with the first estimate, with the German economy expanding by 0.2% in the first quarter.

From the US

In the first half of the week, private sector PMIs and core durable goods orders were the key stats.

The numbers were skewed to the negative, supporting the negative sentiment towards the economy.

In May, the services PMI fell from 55.6 to 53.5, with core durable goods orders rising by just 0.3%. Core durable goods orders had risen by 1.2% in April.

On Thursday, the stats were also Dollar negative, with the US economy contracting by more than expected.

Inflation and personal spending numbers wrapped things up on Friday.

In April, the core PCE price index increased by 4.9% year-on-year, which was softer than a 5.2% rise in March.

Personal spending increased by a further 0.9% in April, following a 1.4% jump in March.

While the stats influenced, the FOMC meeting minutes on Wednesday also drew plenty of interest. The minutes were hawkish, showing members’ willingness to deliver multiple 50 basis point rate hikes. Aligned with previous Fed Chair Powell’s commentary, members were also willing to move beyond neutral to curb inflation.