11/05/2015- Last week’s markets and economic data expected in the week ahead
The outcome of the UK general election was very well received by London’s financial markets on Friday, with equities and Sterling rising strongly and government bonds rising modestly. Investors welcomed the surprise victory by the Conservative party as a sign of increased political stability.
Domestic economic data released last week was limited. A purchasing managers’ index in the construction sector retreated in April, with index compiler Markit saying there were signs of construction companies delaying spending decisions ahead of the general election. However, a corresponding survey in the dominant services sector rose to an 8-month high in April.
Overall economic data released last week was mixed. The US economy created 223,000 jobs in April, in line with expectations, as the unemployment rate ticked down to 5.4%. A key purchasing managers’ index in the services sector rose to a very healthy level in April. In Europe, corresponding surveys in the manufacturing and services sectors were broadly unchanged in April, whilst retail sales across the Eurozone fell in March for the first time since last September.
Stock markets posted a broadly positive week. The FTSE 100 index rose by 0.87% over the course of the week; the S&P 500 index rose by 0.37%; the Dax index rose by 2.23%; whilst the Nikkei index fell by 0.72%. In sovereign bond markets, the UK 10-year Gilt yield is currently at 1.99%, the US 10-year Treasury yield is at 2.12% and the German 10-year Bund yield is at 0.55%.
Economic data due for release this week is shown below. First quarter GDP growth figures for the Eurozone, and US retail sales figures, are likely to be the highlights.
UK – Industrial production
UK – Unemployment
Eurozone – Q1 GDP growth (1st est.)
US – Retail sales
China – Retail sales
China – Industrial production
US – Industrial production