Daily Market Commentary 28th April 2023

US equity markets surged overnight, lead by Meta and other Tech shares, beating earnings expectations. Meta, Microsoft and alphabet have all exceeded earnings expectations and dragged the markets higher. This was despite some bad economic news. US Q1 GDP increased by 1.1%, missing he 2% expected, while inflationary pressures also surged. The core PCE measure, that the Fed pays close attention to, rose by 4.9%, from 4.4% and way above the expected 4.7%. This is not good news for the Fed, who had telegraphed one more rate rise before hitting the ‘pause’ button. Inflation is clearly increasing and markets will be disappointed if the Fed is forced into further rate rises. Equities shrugged off the disappointing economic news and surged upwards. The EUR dipped back o 1.1000, following weaker consumer confidence numbers, while the GBP pushed above 1.2450.

The commodity currencies stabilised, with the AUD regaining 0.6600, while the NZD pushed above 0.6100. NZ Business Confidence remains in the doldrums, with the index remaining heavily in negative territory, at minus 43.8. Recessionary fears are impacting commodity prices and leading to downward pressure on the currencies. Market attention will turn to inflation and growth in Europe, with German and EU GDP growth numbers and German inflation data set for release tonight.