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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
The European Commission has cut its gross domestic product growth forecast for 2022 whilst simultaneously raising its estimate for inflation amid soaring energy costs.
Despite the eurozone economy performing more resilient than initially expected throughout the first quarter of the year, with growth of 0.3% compared to an expected 0.2%, the EC has revised its 2022 forecast to 2.7% - down from 4.0%.
Reflecting the sharp rise in energy prices seen across the continent, the group has also raised its inflation forecast, almost doubling it from 3.5% to 6.1%.
In a similar vein, the United Kingdom’s rate of inflation accelerated to its highest level since 1982 as it topped 9.0%.
In the United States, comments from Federal Reserve officials over the week did little to calm similar inflation and interest rate fears. The week’s economic data offered mixed signals about whether a recession was imminent. On Tuesday, investors seemed to welcome news that retail sales, not including the volatile vehicle sector, had risen more than expected in April (0.6% versus approximately 0.4%), while March’s gain was revised upward to 2.1%. Industrial production, manufacturing production and capacity utilisation figures in April also came in higher than anticipated.
Finally, economic data released last week pointed to slowing growth in China. Retail sales and industrial output data for April fell behind estimates amid continued pandemic lockdowns - reflecting China’s zero-COVID approach. Fixed asset investment rose 6.8% from January to April from a year ago but also missed the consensus forecast. Home prices in China fell in April for the eighth straight month, declining 0.3% from March, which marked the fastest decline in five months.
