📆 Friday, May 17
► European stocks retreated for a second consecutive day, with the Stoxx 600 index falling by 0.4%. This decline follows a record nine-day winning streak, influenced by reduced expectations for Federal Reserve policy easing. Luxury group Richemont gained over 6% after a management reshuffle, while major banks continued their upward trend, gaining 21% so far this year. However, broader market sentiment was dampened by the repricing of rate cut expectations. Investors reduced Fed rate cut expectations despite Fed friendly data partially due to rather hawkish statement from Fed officials. Investors await Eurozone inflation data and further comments from Fed officials and European Central Bank policymakers for clues on future interest rate paths.
► US futures declined after retreating from record highs in both the S&P 500 and Nasdaq 100. The USD and Treasuries held steady amid cautious trading ahead of the Federal Reserve's policy decisions. Earnings reports have shown a majority of companies beating expectations, helping to stabilize markets despite concerns over prolonged high interest rates. Fed Chair Jerome Powell's comments on Sunday will be pivotal in shaping market expectations.
► Asian equities saw declines due to signs of economic weakness in China. China's industrial production in April grew more than anticipated at 6.7% Y/Y, but retail sales and fixed asset investment missed forecasts. The unemployment rate in China fell to 5% (at least according to official data), and the government announced significant measures to support the housing market, including easing mortgage rules and launching a $138 billion bond issuance for infrastructure spending. The Bank of Japan maintains bond buying targets, weakening the JPY against the USD.
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