Daily Market Commentary 1st May 2024

Markets closed out a dramatic month of trading in April, with some big losses on equity markets, followed by a recovery later in the month. The problem lies in resurgent inflation in the US, while GDP growth rates are tumbling faster than expected, all the while Europe is stagnating. Inflation remains the key to interest rates and bond yields have been resurgent, warning or perhaps predicting, the Fed will hold rates ‘higher for longer’. Overnight EU inflation was flat, coming in at 2.4%, while GDP growth inched into positive territory, handily avoiding a technical recession. Growth rates across Europe have been flat, with Germany hovering just above 0%, along with other major nations France, Italy and Poland. Inflation will not go away and high energy costs ensure these levels will remain. The Fed is likely to hold rates unchanged and talk of stamping out resilient inflation, which ensures elevated bond yields and supports the stronger US Dollar. The EUR dipped back below 1.0700, while the GBP fell back to 1.2500.

Commodity currencies suffered the harder reserve, with the AUD falling back below 0.6500, while the NZD tests 0.5900, to the downside. The RBNZ releases the Financial Stability reports today, which will interest domestic players, while Australian Unemployment numbers are always of interest locally. All eyes turn to the Federal Reserve and US Employment reports.