Last week, the S&P 500 rose by 2.3% (MTD 7.8%, YTD 19.3%), while the Euro Stoxx 50 rose by 3.4% (MTD 6.9%, YTD 18.1%). Equities rallied as softer inflation and activity data led to expectations of lower rates.
In the US, data was suggestive of an economic slowdown. October consumer prices rose by 3.2% y/y (headline) and 4.0% (core), both below market expectations. Falls in energy and gasoline prices drove the former and the latter was the lowest level since September 2021. Meanwhile, October retail sales fell by 0.1% m/m, driven by the fall in gasoline sales. The control group figure, which excludes volatile items and is used for calculating GDP, rose by 0.2% m/m. Finally, weekly initial jobless claims rose to 231K, the highest since August.
Chinese economic data for October showed healthy activity. There were upside surprises for both retail sales and industrial production, which expanded by 4.6% y/y and 7.6%, respectively. Fixed-asset investment rose by 2.9% y/y, below expectations of 3.1%.