UK retail sales rose higher-than-expected this morning having increased 0.5% on a month-on-month basis for April. This beat market expectations of a 0.3% rise and came after a 1.2% fall last month.
Investor sentiment across US equity markets were buoyed yesterday on some progress made around debt ceiling talks. According to some sources the Republican and Democratic negotiators are just $70bn apart on a possible deal. AI related stocks were also lifted by chipmaker Nvidia’s share price rising some 24% following strong Q1 results. More generally, yesterday’s session saw the S&P 500 close 0.88% higher while the tech heavy Nasdaq rose 1.71%. In the UK however, the FTSE 100 ended Thursday 0.7% lower with the index being weighed down by the prospect of further hikes from the BoE.
Oil Prices Decline Following Novak’s Comments
Yesterday saw oil prices slide over 3% as the Russian Deputy Prime Minister Alexander Novak provided comments which contrasted with previous remarks from the Saudi energy minister around further possible cuts from OPEC+. Earlier this month, the Saudi energy minister Prince Abdulaziz bin Salman would make further cuts ahead of their next meeting on 4th June. However, yesterday Novak seemed to downplay the prospect of these cuts saying that he did not think these were likely. WTI crude futures are currently trading around $72 dpb. Earlier this year, OPEC+ said that they would look to reduce output by some 1.16 million barrels per day from May until the end of 2023.
As Q1 GDP beat expectations, corporate profits over Q1 saw a considerable decline, falling 6.8% to their lowest level since Q2 2021. The scale of the decline far surpassed expectations of a 0.9% fall, though this data includes profits from the Federal Reserve which given losses on their gargantuan bond portfolio (brought about by rising interest rates), means the data is heavily skewed by the Fed’s weight. In fact, when we discount for the Federal Reserve, corporate profits hit an all-time high, though the pace of growth slowed from previous quarters.
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The vast Ukrainian Nova Khakovka Dam has been destroyed in the Russian occupied region of Kherson, Ukraine releasing a torrent of water as concerns for residents and nuclear power facilities up and downstream grows.
Plans have been unveiled for a Universal Basic Income (UBI) trial in the UK, with the think tank Autonomy currently seeking financial backing. It is hoped that the trial will span over two years with participants receiving £1,600 each month and being in control of how they spend or save the funds.
Today all eyes are on US labour market data where the markets will be looking to gain an insight into the health of the US economy and the extent to which the jobs market is feeding into inflationary pressures ahead of the Fed’s meeting on 12 June.
Last night, the House comfortably passed the debt ceiling bill in arguably the most important stage in the process to ensure that the world’s largest economy averts a technical default. The House of Representatives cleared the Fiscal Responsibility Act by 314-117, the bipartisan deal assembled by President Joe Biden and House Speaker Kevin McCarthy.
Tonight, congress will vote on the bill agreed by President Joe Biden and House Speaker Kevin McCarthy, as the US tries to avert X-date by raising the debt ceiling. According to Reuters, “the deal caps federal spending and forces more poor people to work for food aid, concessions that Democrats hate. But it also preserves much of Biden's Inflation Reduction Act and punts the next debt ceiling showdown into 2025, which Republicans hate.”
As markets weigh on the Bank of England’s interest rate decision on 22 June, this morning’s hotter-than-expected inflation print has seen investors upwardly revise rate hike expectations. Indeed, market reaction to this morning’s print is a further reaffirmation that inflation continues to be the hottest topic of conversation.
The incumbent Recep Tayyip Erdogan has secured another five years as Turkey’s president following a run-off election which saw him take 52% of the votes, against Kemal Kilicdaroglu’s 48%
The latest data from Germany indicates that their economy contracted 0.3% during the first quarter of 2023. Given that this follows a contraction of 0.5% seen over Q4 2022, Europe’s largest economy is now in a technical recession.