USA
Most of the major benchmarks closed lower over the holiday-shortened week but rounded out a month of gains. In contrast to much of the month, small-caps performed better than large-caps, and value stocks held up better than growth shares. The technology-heavy Nasdaq Composite was especially weak, due in part to a sharp decline in cloud software provider Salesforce, which fell sharply after releasing first-quarter revenues that missed consensus estimates. Markets were shuttered Monday in observance of the Memorial Day holiday.
The catalysts for the week’s moves were arguably harder to detect than usual. Much of the week’s relatively light economic calendar came in roughly in line with expectations, most notably the Commerce Department’s personal consumption expenditure (PCE) price index report, released Friday morning. Core (less food and energy) PCE prices—widely considered the Federal Reserve’s preferred inflation gauge—rose 0.2% in April, down slightly from the previous two months and seemingly a period of calming inflation pressures following January’s 0.5% spike.
Europe
STOXX Europe 600 Index ended 0.46% lower as hotter-than-expected eurozone inflation increased uncertainty about policy easing by the European Central Bank (ECB) beyond June. Major stock indexes also fell over this period. France’s CAC 40 Index dropped 1.26%, while Germany’s DAX declined 1.05%. Italy’s FTSE MIB ended the week flat. The UK’s FTSE 100 Index lost 0.51%.
Japan
Japan’s stock markets generated mixed weekly returns, with the Nikkei 225 Index falling 0.4% and the broader TOPIX Index gaining 1.1%. A downward revision to U.S. economic growth data increased the likelihood that the Federal Reserve may cut interest rates at least once before the end of this year, lending some support to risk appetite globally.
China
Chinese equities were little changed after an unexpectedly weak manufacturing reading highlighted growth headwinds on the economy. The Shanghai Composite Index was broadly flat, while the blue chip CSI 300 gave up 0.6%. In Hong Kong, the benchmark Hang Seng Index lost 2.84%.