Market Update

The market had anticipated rate cuts by the Fed this year, but Wednesday's announcement confirmed that they won't begin in May. Fed Chair Jerome Powell disclosed last week that interest rates would remain at 5.25-5.5% for now. Despite minor fluctuations, which have intermittently brought the Fed closer to and then further from their 2% target over recent months, policymakers declared they require more confidence in the downward trend of price growth before considering monetary loosening.
Powell's comments at a subsequent press conference caused markets to rally, as he indicated that the Fed's next move is unlikely to be a rate hike. He emphasized that policymakers will continue to assess critical data, such as labor market indicators, to determine when to lower rates. Regarding speculation about the impact of the upcoming US election on their decisions, Powell asserted that they will disregard election-related 'noise' and focus on economics to ensure accurate policy-making.
The latest US jobs report may give the Fed pause, with 175,000 jobs added in April, falling below expectations, and the unemployment rate rising from 3.8% to 3.9%.
Meanwhile, the Eurozone's unemployment rate remained unchanged at 6.5% in March, marking the fifth consecutive month at that level. Spain reported the highest unemployment rate at 11.7%, while Germany and Malta had the lowest at 3.2%. This data follows the ECB's decision in April to keep rates unchanged pending further evidence of inflation moving toward their 2% target.
China's Caixin PMI services data for April was 52.5, slightly down from 52.7 in March but generally meeting expectations. A PMI above 50 signals expansion, and below 50 indicates contraction. China's figure reflects 16 straight months of growth in the services sector, with new business reaching levels not seen since May of the previous year, alongside increased overseas demand and tourism.
Looking ahead, this week will bring the Bank of England's interest rate decision and GDP figures, Eurozone retail sales data, and China's CPI figures.