Week Summary 23-27 May 2022

USA

Despite a week where risk aversion continues, after several weeks in negative territory, the main indexes finally had a positive week.

One of the reasons for a more positive view by investors is perhaps the fact that economic data from this past week have been more encouraging. Data that show a slowdown in demand, is something the Federal Reserve was looking for with this monetary policy.

It is expected by some that if the next economic data is favorable for this, the next interest rate hike will be 0.25% and not 0.50%. This shows that the measures taken by the Federal Reserve are working.

Europe

After several months with a dovish stance, somewhat contrary to the rest of the main Central Banks, President Lagarde seems to reveal a more hawkish stance, like the rest of her colleagues at the European Central Bank.

The ECB’s plan is to end its asset purchase program in July and start raising its benchmark interest rate. It hopes to do this and reach a positive interest rate by the end of the third quarter.

The UK continues to have a very aggressive stance, with consecutive hikes in its benchmark interest rate, and plans to continue to do so. Especially after weak economic data has indicated to the Bank of England that they will have to maintain this stance.

Asia

With a more favorable economic environment, low inflation, and good economic results, some investors have seen bad press in other countries such as China and the USA. This caused their stock market indexes to fall, with only some recovery on the last day of last week.

The zero-tolerance policy of China’s government is causing worries and economic slowdowns. The prolonged lockdown is causing severe problems in the Chinese economy, with several factories temporarily closing their doors. It should be remembered that many real estate companies are still having problems meeting their debts, with some considering alternative means of doing so.

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