Global Highlights This Week: The Arrival of the US CPI Data and the Potential Continued Escalation of Geopolitical Tensions
Last week, the three major US stock indexes all recorded declines. The S&P 500 index fell 0.47% cumulatively, the Nasdaq index dropped 0.27%, and the Dow Jones index declined 0.16%.
The United States and the United Kingdom reached a trade agreement last week, which once boosted market optimism. This is the first trade agreement reached since Trump launched the global trade war and imposed tariffs on multiple countries.
Investors are currently continuing to pay attention to the negotiations between the Trump administration and other countries, hoping that more agreements can be reached.
"Negotiations on a global scale are being launched, and market optimism about the possibility of reaching more agreements before the suspension period expires is rising," CFRA strategists wrote in a report.
The market is about to welcome a busy week of economic data. This Tuesday, the US consumer price index (CPI) for April will be announced, reflecting the latest inflation trend. And the retail sales data for April this Thursday will reveal whether consumer spending remains robust.
Although the economic impact of tariffs remains unclear, there is a general concern that import taxes will drive up prices and restrain economic growth.
Matthew Miskin warned that if the CPI is higher than expected and retail sales are weak, the market may worry about the risk of stagflation, that is, weak economic growth and persistent high inflation, which may put pressure on the stock market.
Some investors pointed out that the Federal Reserve also seemed to respond to these concerns at this week's interest rate meeting.
The Federal Reserve kept interest rates unchanged this week and pointed out that the risks of rising inflation and unemployment are both increasing.
The Q1 earnings season for US stocks is ongoing. Retail giant Walmart will release its earnings report before the US stock market opens this Thursday. Its earnings report is expected to provide important information on consumer behavior and the cost of imported goods.
Beyond the financial sector, geopolitical issues are also worthy of attention.
The situation between India and Pakistan escalated abruptly last week. Although the two countries announced an agreement to cease fire over the weekend, India claimed that Pakistan violated the cease-fire agreement, while Pakistan denied it.
Regarding the Russia-Ukraine conflict, Ukraine announced an unconditional cease-fire for at least 30 days on Saturday. Leaders of major European countries simultaneously warned that if Russia does not comply with the cease-fire agreement, it will face new large-scale sanctions.
Russia responded that it will consider the proposal for a 30-day cease-fire. Russia has its own position on this issue, and attempts to put pressure on Russia are useless.
Overview of Important Overseas Economic Events This Week:
- Monday: Japan's trade balance for March, the Central Bank of Russia releases the minutes of its monetary policy meeting
- Tuesday: UK unemployment data for April, US CPI data for April, the Bank of Japan releases a summary of the opinions of its April monetary policy meeting, US President Trump visits Saudi Arabia, Qatar, and the United Arab Emirates from May 13th to 16th
- Wednesday : OPEC releases its monthly crude oil market report, the final value of Germany's CPI data for April
- Thursday : UK preliminary annual GDP growth rate for the first quarter, US retail sales data for April, US PPI for April, the IEA releases its monthly crude oil market report, Federal Reserve Chairman Powell gives the opening remarks at an event
- Friday : Eurozone's seasonally adjusted trade balance for March, the preliminary value of the one-year inflation rate expectation in the US for May, the preliminary value of the University of Michigan consumer confidence index in the US for May