Market flash: Lots of news

For many markets it was a short holiday week but there was lots of news.

The Fed stuck to its stance at its latest meeting even though economic data was looking mixed. Manufacturing ISM fell from 57.2 to 54.8, or more than expected, but services ISM rose from 55.2 to 57.5 or above consensus expectations. Janet Yellen preferred to focus on the strong labour market. Investors expect another rate hike in June. US bond yields started to rise a little again.

After last weekend’s summit, the stand-off is now on between the UK and the European Union over Brexit talks. Discussions are scheduled to start before the June 8 parliamentary elections in the UK and will first tackle exit conditions and then the future relationship.

A drop in China’s PMI figures triggered a fall in metal prices and commodity stocks. Oil also suffered a big drop amid investor doubts on OPEC agreeing to prolong production cuts at its May 25 meeting and confirmation that shale oil production was rising.

In France, the debate between second round presidential candidates Marine Le Pen and Emmanuel Macron led to an increase in pro-Macron polls. As a result, non-resident investors are returning to European equities now that the threat of a Euro crisis has receded. Eurozone risk assets consequently outperformed other geographical zones and government bond yields fell.