Stock Indices End June and Q2 Bullish After Soft PCE Inflation Numbers

Stock markets ended the month and the quarter with decent gains as US inflation numbers came weaker again

Skerdian Meta•Saturday, July 1, 2023•2 min read

Stock markets resumed the bullish trend in the first half of June, as the USD resumed the retreat and the risk sentiment improved. Although, in the previous week, USD buyers started to come back as economic data from the US was showing improvement. This week we also saw some decent figures from the US once again, which raised the prospect of the FED raising interest rates again, but the sentiment remained positive which left stock markets bullish. The PCE core price index posted a slowdown, confirming that prices are falling in the US, unlike in the UK where inflation continues to remain upbeat.

Daily closing changes:

Stoxx 600 +1.2%
German DAX +1.3%
UK FTSE 100 +0.8%
French CAC +1.3%
Italy MIB +1.2%
Spain IBEX +1.0%

Weekly change:

Stoxx 600 +2.0%
German DAX +2.0%
UK FTSE 100 +1.0%
French CAC +3.4%
Italy MIB +3.8%
Spain IBEX +3.7%

Q2 change in indices:

Stoxx 600 +0.9%
German DAX +3.3%
UK FTSE 100 -1.3%
French CAC +1.7%
Italy MIB +4.2%
Spain IBEX +4.0%

It’s always satisfying when the end of both a month and a quarter falls on a Friday, as it provides a neat conclusion and paves the way for a fresh beginning in the upcoming week. Despite the significant disruptions witnessed overnight, European stocks have not displayed any signs of aversion or reluctance in response.

US Personal Consumption Expenditure Report US May 2023

US core PCE May — <div class="content-data__caption" style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 14px; line-height: 19px; font-family: 'Open Sans', SansFallback, sans-serif; vertical-align: baseline; -webkit-box-flex: 1; flex-grow: 1; width: 0px;" data-v-3a7224e1="">US core PCE</div>

May core PCE inflation YoY +4.6% vs +4.7% expected
April core PCE was +4.7%
May PCE core MoM +0.3% m/m vs +0.3% expected
April core PCE MoM was +0.3%
Headline inflation PCE YoY +3.8% vs +4.4% prior (revised to +4.3%)
Deflator MoM +0.1% vs +0.4% prior

Consumer spending and income for May:

Personal income May +0.4% vs +0.3% expected.
Prior month was +0.4% (revised to +0.3%)
Personal spending MoM +0.1% vs +0.2% expected.
Prior month personal spending was +0.5% (revised to +0.2%)
Real personal spending +0.0% vs 0.5% prior

DAX H4 Chart – MAs Keeping the Price Supported

This also turned the risk currencies bullish, with EUR/USD climbing above 1.09 again. Gold surged around $20 after making a nice bullish reversal from below $1,900 on Thursday. This indicates that the USD is getting beaten up across the board, with most traders now expecting just one more hike by the FED.

Gold Live Chart

GOLD

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.