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In our weekly Market Monday insights, Prosperity Investment Management examine the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
Japan’s export market saw a considerable increase on last year - its highest in more than 40 years - whilst the UK’s inflation rate rose higher than expected last month. In this week’s Market Monday, we break down the key stories of the past week.
Beginning in the UK inflation jumped again in May, accelerating to 2.1% on higher prices for clothing, fuels, and meals in restaurants and bars. The increase was above economists’ forecasts and the Bank of England’s target. Governor Andrew Bailey has said that he would not hesitate to tighten monetary policy if the inflation rate consistently exceeded the BoE’s target. Meanwhile, UK payrolls rose for a sixth consecutive month - driven by hiring in the recovering hospitality industry with the unemployment rate averaging 4.7% in the three months to 30th April.
Elsewhere in Europe, the European Commission has signed off on the first two national recovery plans—those of Spain and Portugal—supported by the €800bn Next Generation EU fund. Italy’s plan is next in line, with approval expected in coming days.
Over in the United States, the early part of the week was relatively quiet on subdued trading volumes as investors looked forward to the end of the Federal Reserve policy meeting on Wednesday. Policymakers acknowledged that progress on vaccinations has allowed the economic recovery from the pandemic to gain strength.
In Asia, Chinese consumer spending was cautious during the Dragon Boat Festival holiday. Tourist numbers declined slightly from 2019 levels, but total spending fell 25% - a similar shortfall with the May Day holiday. Weak box office revenue at China’s cinemas also offered evidence of a sluggish recovery in consumer services whilst in Japan, exports rose 49.6% year-on-year in May - the highest growth since 1980.
The jump in exports largely reflected a rebound in shipments from last year’s plunge in the wake of the pandemic shock. The highest export growth was to the U.S., driven by cars and vehicle parts while exports to China were also strong, led by chip production equipment and hybrid cars.
