Global Stocks To Post Third Weekly Loss?

Risk aversion has been dominating recently on back of concerns of a global slowdown and uncertainty about the outcome of the Brexit referendum just to name a few parameters. This could lead to the that the saying “sell in May and walk away” once again will prove itself to be correct. US stocks were flat to lower yesterday with Apple dropping to two-year lows on uncertainty about future demand for iPhones. In FX, the US Dollar again posted gains more or less across the board, while Fixed Income prices took another step higher pushing yields lower.

Norges Bank kept rates unchanged as expected

From the UK, the BoE didn’t bring any new information to the table. Underlying macro figures have not been supportive for the UK growth, whilst inflation has been to the upside. This was also noted in the Inflation Report, where inflation forecasts were increased, triggering buying interest in the GBP-pairs. Price action reversed in the US session, and Cable has been trading lower with the 50% Fibo retracement in recent wave being tested before 2-week lows at 1.4375.

GBPUSD 4h

20160513 GBPUSD.H4

Overnight, NZD Retail Sales came out mixed to lower and Asian stocks traded lower with Nikkei down 1.2% still hovering just above the daily Ichimoku cloud formation.

This morning, EU stocks have gapped lower on the opening and EURUSD has printed new May lows at 1.1329 ahead of the preliminary Q1 GDP figures at 11CET, expected at 0.6%/1.6%. Trade figures are expected to reduce the growth figure, while market players should keep an eye out for the growth in investments and consumption.

Ahead of the opening of the US stock markets, the US April PPI and Retail Sales will be released. Headline PPI is expected to increase, while the Core figure is expected unchanged. The Retail Sales are expected to increase 0.8% versus a drop of 0.4% in March, as energy prices and car sales increased. Should the figures come out higher than expected, we could see ongoing rate speculation that markets are betting on that two hikes from the Fed could back on the table. This should lead to additional risk aversion and we could see stocks dropping for a third week in a row.

MSCI World (Source: Reuters)

20160513 - MSCI World

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