European equities were subdued on Monday, with several major markets closed ahead of crucial inflation data.  The Euro Stoxx 50 gained 0.4% to 5,054, near its record high. Expectations of eased monetary policy in the Euro Area boosted sentiment, with the ECB anticipated to cut interest rates next week. Confidence in disinflation from the ECB’s Governing Council supported hopes for further rate cuts in the third quarter, driving gains across various sectors including luxury brands, autos, and utilities. 

Summary for 28.05.2024 

  • Asian equities traded cautiously this morning amidst anticipation of key inflation readings later in the week. Chinese markets were buoyed by stimulus measures, particularly in tech, but broader sentiment was subdued. Hong Kong’s Hang Seng rose on tech gains, while Australia’s ASX 200 fell on weaker-than-expected retail sales data. 
  • European markets are expected to extend their gains further at the open while US equity futures also rose slightly after a holiday-extended weekend, eyeing economic reports and earnings from retailers for rate outlook cues. 
  • Oil prices stabilised in Asian trading, supported by bargain buying after hitting three-month lows and subdued trading volumes due to public holidays. Attention remained on upcoming inflation data, particularly the US PCE price index, influencing monetary policy decisions and potential impacts on oil demand. Meanwhile, anticipation continues to build for the OPEC+ meeting on 2nd June, which could provide crucial supply cues for the market. 
  • Australian retail sales in April edged up by 0.1% month-on-month, slightly below market expectations of 0.2%. The increase marked a reversal from March’s 0.4% decline, buoyed by growth in non-food sectors. Despite mixed regional performance, year-on-year retail sales rose by 1.3%, showing improvement from the previous quarter’s decline. 
  • The Ifo Business Climate indicator for Germany remained steady at 89.3 in May 2024, matching April’s revised figure but falling short of expectations. Current conditions declined slightly while business expectations improved, reflecting a mixed outlook across sectors. Despite challenges, Germany’s economy shows signs of recovery, particularly in manufacturing, trade, and construction. 
  • European Central Bank Governing Council member Francois Villeroy de Galhau advocated for the possibility of lowering borrowing costs at both the June and July meetings, countering reservations from other officials. He emphasised the need for flexibility, citing persistent inflation concerns, geopolitical tensions, and delayed US rate adjustments. 
  • Stellantis plans to produce a hybrid version of its Fiat 500e electric car in Turin, aiming to boost production amid slowing electric vehicle sales. The move follows discussions with union representatives and aligns with the automaker’s ambition to restore Italian production to 1 million vehicles by 2030. 
  • Saudi Arabia is reportedly planning a multi-billion dollar share sale of state-backed energy giant Aramco as early as June, aiming to raise around $10 billion. The offering, listed in Riyadh, is expected to be fully marketed rather than an accelerated sale, providing crucial cash payouts for the Saudi government. 
  • As of today, the US equity market will transition to same-day settlement for share trades, a practice last seen a century ago. This move, replicated in other jurisdictions, aims to mitigate risks in the financial system. However, concerns linger about potential challenges, including international investors sourcing dollars on time and market participants adapting to the new system.