MARKET UPDATE: US EQUITIES RALLY ON STRONG LABOUR MARKET DATA
LAST WEEK – KEY TAKEAWAYS
US EQUITIES: ROBUST LABOUR MARKET DATA OFFSETS FED GUIDANCE
• US equities fell after the Federal Reserve left interest rates unchanged at its latest meeting and claimed it did not see a need for a move in either direction this year;
• However, the markets rebounded at the end of the week as the non-farm payroll report comfortably beat forecasts in April and unemployment hit its lowest point in nearly 50 years.
• Omnis view: A more dovish tone from the Fed has been one of the catalysts driving US equities lately, with the market now expecting an interest rate cut in the US this year. However, strong labour market data makes this unlikely for the time being.
GLOBAL TRADE: TRUMP RAISES TENSIONS WITH CHINA
• On Sunday, US President Donald Trump threatened to raise trade tariffs on all Chinese goods to 25% and blamed China for slowing the pace of negotiations.
• Omnis view: Both sides indicated recently that trade talks were progressing, so President Trump’s comments come as a surprise. Investor sentiment should take a hit.
UK: STERLING FLUCTUATES AS BREXIT TALKS CONTINUE
• Sterling rallied against the US dollar on Friday after Labour leader Jeremy Corbyn said parliament ‘has to get a deal done’, raising hopes that ongoing talks with the Conservatives could lead to a compromise.
• Omnis view: Economists at the Bank of England lifted their growth forecasts which also supported sterling, although it handed back some of the gains as Shadow Chancellor John McDonnell accused the Prime Minister of a breach of trust for leaking details of the negotiations to the media.
CORPORATE EARNINGS: MIXED WEEK FOR TECH STOCKS
• Apple’s market value briefly rose above $1 trillion after it reported marginally beating forecasts in the first quarter but shares in Alphabet (parent company of Google) fell as it missed revenue expectations.
• Omnis view: According to Factset, 78% of companies in the S&P 500 have reported first-quarter earnings to date, with just over three quarters beating expectations.

EU: ECONOMIC GROWTH PICKS UP
• The euro briefly rallied against the US dollar after initial estimates from statistics agency Eurostat indicated the EU economy exceeded forecasts to grow by 0.4% in the first quarter of the year .
• Omnis view: This latest data is good news for the EU economy, considering the European Central Bank cut its growth outlook as recently as March.
LOOKING AHEAD – TALKING POINTS
ECONOMIC DATA
• Wednesday- Chinese imports, exports and balance of trade for April;
• Thursday- Chinese inflation rate for April; US imports, exports and balance of trade for March;
• Friday- UK economic growth and balance of trade for March; US inflation rate for April.
TRADE TALKS
• Thursday- trade talks resume between the US and China in Washington DC.
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This update reflects Omnis’ view at the time of writing and is subject to change.
The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your Openwork financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given.