Weekly Investment News
Last week saw US equity markets close out Friday in positive territory despite volatile trading. Early in the week, negative economic data releases pushed stocks downward, with inflation being the primary concern for investors. On Tuesday the US Bureau of Labor Statistics released its quarterly Employment Cost Index, which showed that employment costs rose by 1.2% in Q1 of 2024, above consensus expectations of a 1.0% figure, and the fastest pace in over a year. The same day saw the release of the Conference Board’s Consumer Confidence Index which declined sharply in April. The report showed that consumer sentiment in the US had dropped to a figure of 97.0, far below expectations of 104.0 figure and the index’s lowest reading since July 2022.
Later in the week, the Federal Reserve opted to hold interest rates steady as was widely expected at their April FOMC policy meeting. Many investors paid more attention to Fed Chair Jay Powell’s comments in the following press conference than to the decision itself. Despite noting that the Fed was not gaining “greater confidence” that progress had been made on inflation, Powell’s comments were well received by investors, as a rate hike in the next meeting was effectively ruled out, causing stocks to rally.
On Friday, stocks were boosted further with the release of the nonfarm payrolls report, which showed that employers added 175,000 jobs in April, less than consensus expectations of 238,000 and lower than the previous months figure of 315,000. The lower numbers signalled a cooling in the US labour market which continues to be a key focus policymakers battling inflation.
In the Eurozone, preliminary CPI figures showed that headline inflation remained steady in April at 2.4%. Meanwhile GDP figures surprised to the upside, showing an expansion of 0.3% in Q1 of 2024, despite a contraction of -0.1% the previous quarter.