Weekly Market Update – 17/05/24

The old stock market adage “sell in May and go away” would so far have proved to be a costly strategy this year, with major global market indices registering another week of solid gains. 

Investors cheered the US inflation print on Wednesday, with US stocks closing at record highs after the data showed inflation had fallen slightly to 3.4% in April. This prompted traders to reassess their forecasts for Federal Reserve interest rate cuts this year. The April CPI data marks the first month of slowing annual data since January 2024, easing concerns that inflation was getting “sticky” in the world’s largest economy following a streak of above-forecast readings.

With US stocks hitting new heights, government bond yields fell. The two-year Treasury yield, which moves in line with interest rate expectations, initially dropped to 4.71% following the CPI data release – its lowest level since early April. Across the Atlantic, there were also encouraging signs on easing price pressures in the Eurozone, after the EU said this week that it now estimates inflation will drop faster than expected this year.

Andrea Wood, Chartered MCSI
Investment Manager