Daily Market Outlook – Tuesday, May 21

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 Asian stocks paused on Tuesday after a seven-day winning streak. Profit-taking by investors led to a decline in Chinese stocks. Hong Kong’s equity market also experienced a downturn, with Li Auto leading the losses in the MSCI Asia Pacific index due to lower-than-expected first-quarter vehicle sales. Japanese stocks remained steady thanks to positive insurance company earnings. The economic challenges in China remain a major concern in Asia, with recent data showing no signs of recovery in the country’s debt-ridden real estate market. Land sales last month generated the lowest revenue for local governments in eight years, highlighting the financial struggles faced by agencies heavily reliant on this type of income.This week’s main data releases are set for later in the week, leaving today’s schedule relatively light. In the UK, the May CBI industrial trend survey will offer an update on the factory sector. The April survey revealed that orders remained very weak, while selling price inflation reached its highest level since February 2023. It will be interesting to see if the May data indicates any improvement. The most anticipated data release of the week is the UK April CPI inflation report, due early tomorrow. According to consensus forecasts, the year-on-year headline rate is expected to drop sharply to 2.1% from 3.2% in March, marking the lowest rate since July 2021. This decrease is primarily due to an approximately 12% reduction in the Ofgem energy price cap. UK core CPI inflation, which excludes food and energy, is also expected to fall to 3.6% from 4.2%. However, this rate remains higher than the headline rate, with services inflation predicted to stay above 5%. While the anticipated drop in inflation is positive news, it remains uncertain whether Bank of England policymakers will see it as enough progress to justify an interest rate cut.The Eurozone is anticipated to report a larger trade surplus in April compared to March, continuing the recent trend of increasing surpluses. This is mainly due to a decrease in import costs following a drop in gas prices earlier in the year. However, the recent rise in gas prices in May could potentially disrupt this trend.Today, several central bank policymakers, including European Central Bank President Lagarde and Bank of England Governor Bailey, are scheduled to speak. They are expected to speak at events where they are unlikely to address near-term monetary policy. Stateside, there will be more Fedspeak as Governor Christopher Waller and four regional Fed bosses are scheduled to speak at different events. The minutes of the Fed’s previous policy meeting, which are due on Wednesday, will be important, but they do not reflect the recent decrease in CPI after three consecutive months of higher-than-expected results.
 Overnight Newswire Updates of Note

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
 FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

CFTC Data As Of 17/05/24

Technical & Trade ViewsSP500 Bullish Above Bearish Below 5280

EURUSD Bullish Above Bearish Below 1.08

GBPUSD Bullish Above Bearish Below 1.2630

USDJPY Bullish Above Bearish Below 152

XAUUSD Bullish Above Bearish Below 2376

BTCUSD Bullish Above Bearish below 65500

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