Global stocks steam ahead as investors focus on growth outlook

THE DAY AHEAD

• China releases May’s non-manufacturing and NBS manufacturing
purchasing managers’ index.
• Japan posts May’s consumer confidence.


OVERVIEW
• US stocks end month near peak buoyed by growth hopes.
• Europe equities hit fresh record on ECB stimulus.
• Retail frenzy lifts three of Asia’s top performing stock markets.
• Oil edges higher with market set to focus on OPEC+ policy meet.
• ECB doves sour euro rally with pushback against tapering bets.


DEVELOPED MARKETS EQUITIES
US


Stocks notched their fourth straight monthly advance as data signalling
prospects for a sustained rebound of the world’s largest economy outweighed
inflation worries. The dollar was little changed.


The S&P 500 Index ended the week (ended 28 May) near a record, closing little
changed at 4,204.11 on Friday (28 May), while the Russell 2000 Index of small
caps posted its eighth consecutive month of gains – the longest run since 1995. Traders focused on the outlook for higher spending that could boost
growth, even after the personal consumption expenditures core price gauge
rose the most in two decades. The perception that the latest figures will not
be enough to prompt any change in policy by Federal Reserve officials also
helped sentiment. The Dow Jones Industrial Average inched 0.19% higher to
34,529.45. The Nasdaq Composite Index ended the session at 13,748.74.


Inflation has certainly been a contentious topic for investors and economists
alike, with some arguing that price increases are temporary and others
anxious about elevated costs in the longer term. President Joe Biden issued
his first full budget proposal, detailing his ambitions to expand the size and
scope of the federal government with more than USD6t in spending over the
coming fiscal year.


“Stocks continue to rise since the US economic growth ‘exceptionalism story’
does not appear to be going away anytime soon, and as inflation still looks like
it will be transitory,” a market analyst wrote in a note to clients. – Bloomberg
News.