Stock markets dropped this week as inflation concerns began to mount following US CPI data. However, investors were quick to shrug off these concerns in the second half of the week and launch a recovery move on the global stock markets. Will the recovery move continue next week? Be sure to watch US100, DE30 and GOLD next week!
US100 dropped over 5% during the first three days of the current week and was a top laggard among major Wall Street indices. While the index began to recover in the second half of the week, it continues to trade around 5% below its all-time highs. Monetary policy tightening is seen as especially negative for the tech sector but the Fed continues to play down inflation concerns. The question remains how long investors will buy this narrative amid worsening data?
European indices were not hit as hard as their US peers during this week's sell-off. Following a recovery in the later part of the week, German DE30 is trading less than 1% below all-time highs. Investors from Europe will be offered an update on moods within the European economy next week when flash PMIs for May are released on Friday. As usual, traders will focus on readings from France (8:15 am BST) and Germany (8:30 am BST).
Gold reached a fresh 3-month high at the start of the week. However, gold failed to rally on higher-than-expected US CPI reading as US dollar strengthening kept precious metals' prices in check. A key reading for precious metals traders next week is scheduled for Wednesday - FOMC minutes release at 7:00 pm BST. Report is expected to be dovish but any hawkish tilts could impact market moods.