GLOBAL CAPITAL MARKETS OVERVIEW:  

European shares rebounded on Tuesday after sharp losses the previous day, with the domestic DAX up 1.1%, the regional Stoxx 600 up 0.8%, and financials up 1.6%, leading to broad gains. Still, the session mostly reflected a downtrend buying trend as stagflation risks, the Ukraine war, concerns over a slowdown in China, and faster Fed tightening persisted. After Bayer reported earnings, adjusted earnings of 5.25 billion euros in the first quarter, mainly driven by its agricultural business, beat estimates. Swedish nicotine products maker Match jumped 24.9% after receiving a takeover offer from tobacco giant Philip Morris in other news. On the data front, Germany's ZEW economic confidence index unexpectedly rose to -34.3 in May from a 2-year low of -41 the previous month. On Tuesday, the FTSE MIB index rose 1% to close at 23,070, partially recovering from a 2.7% drop in the previous session that sent the index to a two-month low. Investors priced in tightening monetary policy and its impact on growth as investors digested a slew of corporate earnings. Bank and energy stocks led the gains. Paper Banca rose 7.3% after a smaller-than-expected profit loss in the first quarter, while UniCredit, which tracks growth in the sector, ended up 5.5% higher. After reporting higher-than-expected revenue figures, Pirelli also benefited from its first-quarter results, which rose nearly 4%. Investors are now turning to Prime Minister Mario Draghi's meeting with President Biden in Washington today, where topics will include energy security after Italy's rapid weaning from Russia's fossil fuels. The CAC 40 rose 0.5 percent to close at 6,117 on Tuesday, rebounding from a two-month low hit in the previous session. Investors continued to focus on forecasts of the European Central Bank's tightening monetary policy, boosted by financials and luxury stocks. The Paris-based luxury group led gains, with LVMH, Kering, Hermes, and L'Oreal closing in the green after the growth scare in China pushed the sector to a one-year low yesterday. Together, these four companies account for about 22% of the CAC40. Airbus also closed higher, gaining 0.9% on the session after reporting 98 new orders and 48 aircraft deliveries in April. Meanwhile, Europe and Stellantis benefited from improved proposals. On Tuesday, the FTSE 100 rose 0.4% to close at 7,423, partially recovering from a 2.3% drop in the previous session, boosted by Melrose industrials and financials, even as investors worried about the global economic outlook possible stagflation, volatility will continue. UK retail sales fell for a second straight month in April as rising living costs hurt consumer confidence and spending, data from the British Retail Consortium (BRC) showed. Traders are now awaiting data on GDP growth from the Office for National Statistics on Thursday for an update on the health of the UK economy. On the corporate front, utility Centrica said its full-year earnings would be at the top of its forecast range of 10.8p per share on the back of strong operating results in the first four months of 2022, driving its shares up more than 5%. U.S. stocks pared early gains Tuesday morning, briefly entering the negative territory, as initial trough buying lost momentum, while concerns over aggressive tightening and slowing economic growth kept sentiment low. Market volatility comes as investors digest hawkish comments from Cleveland Federal Reserve Bank President Loreta Mester and New York Fed President John Williams; this suggests that the Fed may raise rates by 50 basis points in the next few meetings. All eyes are now on the US inflation report for May for further insight into the central bank's rate hike path. On the corporate front, shares of Peloton Interactive plunged about 15% after reporting a larger-than-expected loss in the first quarter. Novax fell nearly 7% on the back of its most recent quarterly earnings. On the other hand, AMC rose nearly 6% after entertainment company AMC beat Wall Street expectations. Canada's main stock index, the S&P/TSX, rallied above 20,000 on Tuesday, closing Monday at its lowest level since July last year, after traders worried about global oil and metals demand in the previous session. Bought depressed oil and gas and materials stocks after selling amid weak economic growth. On the earnings front, Suncor Energy's first-quarter profit surged to C$2.95 billion from C$820 million in the same period in 2021, beating analyst forecasts and raising its dividend to an unprecedented level. Hongkong Hang Seng Index fell 1.8% to close at 19,634 on Tuesday, hitting a new two-month low after falling as much as 4.1% in early trade. Traders remained concerned about slowing global growth, particularly in China, while additional pledges by the People's Bank of China to support the struggling economy had little impact on investor sentiment. Technology stocks were the worst performer, with the tech index down 3.2%. Hong Kong-listed shares of Chinese technology companies fell, with Tencent down 2.3 percent, Alibaba down 4.8 percent, and NetEase down 1.9 percent.On Tuesday, the Shanghai Composite Index rose 1.06% to close at 3,036 points. The Shenzhen index rose 1.37% to close at 10,913 points, fending off a wider regional sell-off as China's central bank pledged to Use its monetary policy tools to support the economy fully. There are also signs of bargain hunting in the growth-oriented market sector, with analysts saying China's bear market has entered its final stages as selling dwindles. The leading gainers in the new energy sector are Contemporary Amber (2.9%), Tianqi Lithium (2.7%), Sun Power (5.6%), and Eve Energy (9.8%). High-growth tech and healthcare stocks also rebounded, with strength from Orient Currency (2.1%), Nora Technology (8.8%), Gothic (2%), China Miehe (2.7%), and Nantong Jinghua (10%) gain. Meanwhile, lower oil prices sent energy stocks tumbling, led by a 6.5% drop in state-owned CNOOC. New Zealand S&P/NYSE fell 152.25 points, or 1.34%, to settle at 11,229.45, its lowest close since June 21, 2020. Wall Street pulled back sharply overnight, with all three major indexes hitting their lowest levels in more than a year amid growing concerns about rising interest rates and economic growth. Meanwhile, China's export growth was the weakest in nearly two years, while imports stagnated in April as lockdowns across the country crippled supply chains in key cities and created port congestion. Meanwhile, Reuters said BlackRock cut its exposure to Chinese assets, citing a worsening economic outlook. According to local data, credit card spending in New Zealand rebounded in April after falling for two consecutive months. The biggest losers were Good Spirit Hotels Ltd (down 13.3%), Air New Zealand Ltd (down 8.5%), and Pacific Edge Ltd (down 6%). On Tuesday, the Nikkei 225 lost 0.58% to close at a near two-month low of 26,167, while the broader Topix index lost 0.85% to close at 1,862, as concerns over higher interest rates their impact on economic growth continued. Fears dented risk appetite with a sharp sell-off on Wall Street. Rising interest rates have particularly weighed on tech companies, with SoftBank Group (down 1.8%), Laser Technology (down 2.1%), Tokyo Electron (down 1.4%), Recruit Holdings (down 2.3%), and NTT Data Corp (down 7.2%) Shares of other companies fell sharply. Resource-related stocks fell, and commodity prices tumbled overnight, including Inpex Corp (-8%), Sumitomo Metal (-5%), and Nippon Steel (-1.6%). Other index heavyweights also fell, including Japan's Yusen (-4.6%), Sony Group (-3.1%), and Toyota Motor (-3%). Meanwhile, Japanese stocks fell from earlier on news that Japan will retain its stakes in two Russian oil and LNG projects while phasing out Russian oil imports. Australia S&P/ASX 200 index fell 0.98% to close at 7,051, its lowest level in two months, amid a sharp sell-off on Wall Street as concerns over higher interest rates continued to dent risk appetite. Rising interest rates have particularly weighed on tech companies, with Brainchip Holdings (-15.7%), Block Inc (-8.5%), NextDC Ltd (-3.4%), and Pointsbet Holdings (-6%), and Siteminder Ltd (-4.5%) among others. The company suffered substantial losses. Energy and mining stocks also fell on the overnight plunge in oil and iron ore prices, including Woodside Petroleum (-2.6%), Santos Ltd (-1.7%), Beach Energy (-3.9%), BHP Billiton Group (down 2.6%), Rio Tinto (down 3.6%) and Fortescue Metals (down 2.7%). Gold and clean energy-related stocks also fell, led by Newcrest Mining Corp (down 3.6%), Polaris (down 3.6%), Pilbara Mining Corp (down 1.2%), Lynas Rare Earth Corp. (down 1.8%), and Elken Ltd (down 3.3%).

 

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- US: The U.S. IBD/TIPP economic optimism index fell to 41.2 in May 2022 from 45.5 in April and was just above 41 in March. The six-month outlook for the U.S. economy fell 6.5 points to 33.2, the lowest level since August 2011; the index of support for federal economic policy fell 4.4 points to 40.1, the lowest level since December 2015. In addition, as gas prices continued to rise after Russia invaded Ukraine, inflation hit a 40-year high of 8.5%, and the personal finance sub-index slipped 1.8 points to 50.4. Household financial stress reached its highest level since April 2020, when the pandemic began the story.

- US: The U.S. NFIB Small Business Optimism Index remained unchanged at 93.2 in April 2022, unchanged from March and at levels not seen in two years. More business owners expect business conditions to worsen over the next six months, but the share of businesses raising sales prices has fallen from a record high in March. More business owners expect actual sales to be higher in the near term.

- EU: In May 2022, the Eurozone ZEW Economic Confidence Index rose sharply to -29.5 from a two-year low of -43 in April. Eurozone inflation expectations fell 36.5 points to -10.6, although the indicator of current economic conditions in the eurozone fell 6.5 points to -35.

- GE: Germany's ZEW Economic Confidence Index rose to -34.3 in May 2022 from a two-year low of -41 in April. With a slightly less pessimistic outlook on Germany's economic situation, the data beat market expectations of -42. In contrast, the current conditions index fell further to -36.5, its lowest level in a year and worse than the forecast of -35. Most analysts say China's Covid-19 restrictions will weigh heavily on future growth in Germany, with the European Central Bank expected to raise short-term interest rates over the next six months while inflation falls from its current very high levels.

- IT: Industrial production in Italy in March 2022 was unchanged from the previous month, rising 4% in February, while the market expected a contraction of 1.9%. Increases in consumer goods (1% vs. 5.3% in February), energy (2.7% vs. 0.9%), and capital goods (0.4% vs. 2.8%) offset declines in intermediate goods output (-0.7% vs. 3.5%). Industrial production rose 3.4 percent year-on-year, up from an upwardly revised 3 percent in the previous month.

- AU: Australian retail sales rose 1.6% month-on-month in March 2022, after rising 1.8% a month earlier, unadjusted for preliminary data. The latest data marks the third consecutive month of growth in the retail sector as the economy recovers further from the COVID-19 pandemic. Retail sales of household goods (3.4% vs. 2.3% in February), apparel, footwear (0.5% vs. 11.2%), department stores (4.1% vs. 11.1%), cafes, restaurants, and takeaway food (2% vs. 9.7%) sales continued to grow. In addition, food retail sales rebounded (0.5% vs -2.6%). Sales rose in all states: NSW (1.8%), Victoria (0.6%), Queensland (3.4%), Western Australia (1.9%), Tasmania (0.7%) ), the Northern Territory (1.9%) and the Australian Capital Territory (1.1%). Retail sales rose 1.2% in the first quarter and 7.9% in the fourth.

- AU: The NAB Business Confidence Index fell to 10 in April 2022 from a five-month high of 16 in March but remained above the long-term average. Sentiment eased sharply in transportation and utilities, entertainment, and finance. Meanwhile, business conditions rose strongly (20 to 15 in March) as sales (27 to 23) and profitability (22 to 12) continued to strengthen, while employment held steady (10). The gains were aided by a long-awaited recovery in entertainment and personal services and improved conditions in the manufacturing sector. Forward orders fell slightly (9 vs. 12), while capacity utilization rose (83.9% vs. 83.4%). At the same time, cost pressures continued to climb after reaching record growth rates in March, with labor costs rising 3.0% quarterly and procurement costs 4.6% quarterly, both record highs. "Overall, the survey highlights the continued strength of economic activity and the breadth of the recovery," said NAB chief economist Alan Oster.

- UK: UK retail sales fell 1.7% year-on-year in April 2022, a further slowdown from the 0.4% drop the previous month, as higher living costs hit consumer confidence and dampened consumer spending. Helen Dickinson, chief executive of the BRC, said: "High-priced items have been hit the hardest, as consumer spending on furniture, appliances and other household items dominates, coupled with delays in shipments from China. ". She added: “Customers face a tough year, with the Bank of England forecasting inflation to hit above 10%. Retailers are experiencing higher prices due to higher commodity prices, rising transport costs, labor shortages, port delays, and the war in Ukraine. costs. Further headwinds are coming, such as rising global food prices, which rose 13% in March-April.”

- NZ: Electronic card transactions in New Zealand surged 7% in April 2022 from the previous month after falling for two consecutive months. This was the most significant monthly increase in seasonally adjusted credit card spending since November, driven by higher purchases of consumer goods (5.2%), apparel (16.8%), and fuel (3.3%). On an annual basis, credit card spending rose 2.1% in April, reversing a 0.5% decline.

- RU: Russia’s GDP is expected to contract by 12% in 2022, according to internal forecasts by the Ministry of Finance, far exceeding the Ministry of Economy’s forecast of 8%. It was the worst contraction since Russia's transition to a market economy in 1994, as the country felt the effects of sweeping Western sanctions. Significant restrictions include an oil embargo in the US and a fossil fuel phase-out in the UK, while several EU utilities seek alternative sources of natural gas. In addition, several foreign companies have left Russia, while large banks have withdrawn from the SWIFT payment system, and their assets have been frozen. Uncertainty over forecasts remains high as the European Union proposes to phase out oil imports over six months in what could be the biggest hit to Russia's economy so far, with more onerous restrictions likely to follow. According to the central bank, annual inflation is expected to accelerate to 18-23% in 2022.

 

LOOKING AHEAD:   

Today, investors will receive:

- USD: NFIB Small Business Index, FOMC Member Williams Speaks, Treasury Sec Yellen Speaks, IBD/TIPP Economic Optimism, President Biden Speaks, FOMC Member Waller Speaks, and FOMC Member Mester Speaks.

- EUR: Italian Industrial Production m/m, ZEW Economic Sentiment, German ZEW Economic Sentiment, and German Buba President Nagel Speaks.

- GBP: BRC Retail Sales Monitor y/y.

- JPY: Household Spending y/y, and 10-y Bond Auction.

- AUD: NAB Business Confidence.

 

KEY EQUITY & BOND MARKET DRIVERS:

- GE: Germany's 10-year bond yield has retreated from a nearly eight-year high of 1.2% on May 9 but remains well above 1% amid long-standing worries about high inflation data in Europe and expectations that major central banks will Tight monetary policy. Preliminary data showed that inflation in the eurozone hit a record 7.5% in April, while Germany was at its highest level since 1981. Meanwhile, Germany's ZEW Economic Sentiment Index rose to -34.3 in May, well above market expectations for further declines. ECB policymakers had previously suggested that asset purchases could end as early as July, a condition for raising interest rates.

- US: U.S. stock futures, which track the broader market, rose on Tuesday as falling buyers emerged to stem the massive tech rout over the past few days. Still, market sentiment was clouded by concerns over the impact of aggressive tightening against a backdrop of soaring inflation and a challenging growth outlook. All eyes are now on the US inflation report for May for further insight into the central bank's rate hike path. On Monday, the S&P 500 fell 3.2% in regular trading, and the Dow fell 1.99% to hit its lowest level since 2021. The Nasdaq Composite also fell 4.29%, accelerating the tech index's slide to its lowest point since late 2020.

- UK: FTSE 100 futures traded in the green on Tuesday, tracking European and U.S. peers higher and attempting to rebound from a 2.3% drop in the previous session, despite volatility as investors fretted about the global economic outlook and a possible slowdown, stagflation or recession. Sex will continue. UK retail sales fell for a second straight month in April as rising living costs hurt consumer confidence and spending, data from the British Retail Consortium (BRC) showed. Traders are now awaiting data on GDP growth from the Office for National Statistics on Thursday for an update on the health of the UK economy.

 

 

 

STOCK MARKET SECTORS:

- High: Information Technology, Communication Services, Energy.

- Low: Industrials, Real Estate, Financials, Consumer Discretionary, Consumer Staples.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- CNY: The offshore yuan depreciated by more than 6.75 yuan against the dollar on May 9, hitting a fresh 18-month low and extending a steep loss in April, as fears of a global economic slowdown and expectations of rising global interest rates prompted investors to turn to the greenback. Safety. China's zero-tolerance approach to the coronavirus has also weighed on the yuan as authorities in Shanghai extended the lockdown until the end of May, and Beijing further expanded mass testing to an almost daily routine. New data showed that China's export growth slowed to its weakest pace in nearly two years, while imports were little changed in April as stricter and broader coronavirus restrictions halted factory production and weighed on domestic demand. Economists have lowered their forecasts for China's full-year GDP growth to reflect the economic damage from the coronavirus outbreak, putting downward pressure on the yuan.

- USD: The U.S. dollar index rose above 104 on Monday, hitting a fresh 20-year high, as expectations of further monetary policy tightening by the Federal Reserve to fight inflation and worries about slowing global growth drove investors to the greenback's safety. Uncertainty surrounding the inflation outlook, the Ukraine war, and the Chinese blockade fuel safe-haven demand for the dollar. Meanwhile, the Federal Reserve last week raised its benchmark funds rate by 50 basis points, and the vital jobs report reinforced bets for a further sharp hike. Investors are now looking forward to Wednesday's new inflation data for the central bank's likely next move. Futures markets expect the Fed to raise 75 basis points at its next meeting in June and tighten by 200 basis points.

 

CHART OF THE DAY:

On Tuesday, the FTSE 100 rose 0.4% to close at 7,423, partially recovering from a 2.3% drop in the previous session, boosted by Melrose industrials and financials, even as investors worried about the global economic outlook possible stagflation, volatility will continue. UK retail sales fell for a second straight month in April as rising living costs hurt consumer confidence and spending, data from the British Retail Consortium (BRC) showed. Traders are now awaiting data on GDP growth from the Office for National Statistics on Thursday for an update on the health of the UK economy. On the corporate front, utility Centrica said its full-year earnings would be at the top of its forecast range of 10.8p per share on the back of strong operating results in the first four months of 2022, driving its shares up more than 5%. - UK FTSE 100 index - D1, Resistance (target zone) around ~ 7737, Support around  ~ 7150

 

GLOBAL CAPITAL MARKETS OVERVIEW:   European shares rebounded on Tuesday after sharp losses the previous day, with the domestic DAX up 1.1%, the regional Stoxx 600 up 0.8%, and financials up 1.6%, leading to broad gains. Still, the session mostly reflected a downtrend buying trend as stagflation risks, the Ukraine war, concerns over a slowdown in China, and faster Fed tightening persisted. After Bayer reported earnings, adjusted earnings of 5.25 billion euros in the first quarter, mainly driven by its agricultural business, beat estimates. Swedish nicotine products maker Match jumped 24.9% after receiving a takeover offer from tobacco giant Philip Morris in other news. On the data front, Germany's ZEW economic confidence index unexpectedly rose to -34.3 in May from a 2-year low of -41 the previous month. On Tuesday, the FTSE MIB index rose 1% to close at 23,070, partially recovering from a 2.7% drop in the previous session that sent the index to a two-month low. Investors priced in tightening monetary policy and its impact on growth as investors digested a slew of corporate earnings. Bank and energy stocks led the gains. Paper Banca rose 7.3% after a smaller-than-expected profit loss in the first quarter, while UniCredit, which tracks growth in the sector, ended up 5.5% higher. After reporting higher-than-expected revenue figures, Pirelli also benefited from its first-quarter results, which rose nearly 4%. Investors are now turning to Prime Minister Mario Draghi's meeting with President Biden in Washington today, where topics will include energy security after Italy's rapid weaning from Russia's fossil fuels. The CAC 40 rose 0.5 percent to close at 6,117 on Tuesday, rebounding from a two-month low hit in the previous session. Investors continued to focus on forecasts of the European Central Bank's tightening monetary policy, boosted by financials and luxury stocks. The Paris-based luxury group led gains, with LVMH, Kering, Hermes, and L'Oreal closing in the green after the growth scare in China pushed the sector to a one-year low yesterday. Together, these four companies account for about 22% of the CAC40. Airbus also closed higher, gaining 0.9% on the session after reporting 98 new orders and 48 aircraft deliveries in April. Meanwhile, Europe and Stellantis benefited from improved proposals. On Tuesday, the FTSE 100 rose 0.4% to close at 7,423, partially recovering from a 2.3% drop in the previous session, boosted by Melrose industrials and financials, even as investors worried about the global economic outlook possible stagflation, volatility will continue. UK retail sales fell for a second straight month in April as rising living costs hurt consumer confidence and spending, data from the British Retail Consortium (BRC) showed. Traders are now awaiting data on GDP growth from the Office for National Statistics on Thursday for an update on the health of the UK economy. On the corporate front, utility Centrica said its full-year earnings would be at the top of its forecast range of 10.8p per share on the back of strong operating results in the first four months of 2022, driving its shares up more than 5%. U.S. stocks pared early gains Tuesday morning, briefly entering the negative territory, as initial trough buying lost momentum, while concerns over aggressive tightening and slowing economic growth kept sentiment low. Market volatility comes as investors digest hawkish comments from Cleveland Federal Reserve Bank President Loreta Mester and New York Fed President John Williams; this suggests that the Fed may raise rates by 50 basis points in the next few meetings. All eyes are now on the US inflation report for May for further insight into the central bank's rate hike path. On the corporate front, shares of Peloton Interactive plunged about 15% after reporting a larger-than-expected loss in the first quarter. Novax fell nearly 7% on the back of its most recent quarterly earnings. On the other hand, AMC rose nearly 6% after entertainment company AMC beat Wall Street expectations. Canada's main stock index, the S&P/TSX, rallied above 20,000 on Tuesday, closing Monday at its lowest level since July last year, after traders worried about global oil and metals demand in the previous session. Bought depressed oil and gas and materials stocks after selling amid weak economic growth. On the earnings front, Suncor Energy's first-quarter profit surged to C$2.95 billion from C$820 million in the same period in 2021, beating analyst forecasts and raising its dividend to an unprecedented level. Hongkong Hang Seng Index fell 1.8% to close at 19,634 on Tuesday, hitting a new two-month low after falling as much as 4.1% in early trade. Traders remained concerned about slowing global growth, particularly in China, while additional pledges by the People's Bank of China to support the struggling economy had little impact on investor sentiment. Technology stocks were the worst performer, with the tech index down 3.2%. Hong Kong-listed shares of Chinese technology companies fell, with Tencent down 2.3 percent, Alibaba down 4.8 percent, and NetEase down 1.9 percent.On Tuesday, the Shanghai Composite Index rose 1.06% to close at 3,036 points. The Shenzhen index rose 1.37% to close at 10,913 points, fending off a wider regional sell-off as China's central bank pledged to Use its monetary policy tools to support the economy fully. There are also signs of bargain hunting in the growth-oriented market sector, with analysts saying China's bear market has entered its final stages as selling dwindles. The leading gainers in the new energy sector are Contemporary Amber (2.9%), Tianqi Lithium (2.7%), Sun Power (5.6%), and Eve Energy (9.8%). High-growth tech and healthcare stocks also rebounded, with strength from Orient Currency (2.1%), Nora Technology (8.8%), Gothic (2%), China Miehe (2.7%), and Nantong Jinghua (10%) gain. Meanwhile, lower oil prices sent energy stocks tumbling, led by a 6.5% drop in state-owned CNOOC. New Zealand S&P/NYSE fell 152.25 points, or 1.34%, to settle at 11,229.45, its lowest close since June 21, 2020. Wall Street pulled back sharply overnight, with all three major indexes hitting their lowest levels in more than a year amid growing concerns about rising interest rates and economic growth. Meanwhile, China's export growth was the weakest in nearly two years, while imports stagnated in April as lockdowns across the country crippled supply chains in key cities and created port congestion. Meanwhile, Reuters said BlackRock cut its exposure to Chinese assets, citing a worsening economic outlook. According to local data, credit card spending in New Zealand rebounded in April after falling for two consecutive months. The biggest losers were Good Spirit Hotels Ltd (down 13.3%), Air New Zealand Ltd (down 8.5%), and Pacific Edge Ltd (down 6%). On Tuesday, the Nikkei 225 lost 0.58% to close at a near two-month low of 26,167, while the broader Topix index lost 0.85% to close at 1,862, as concerns over higher interest rates their impact on economic growth continued. Fears dented risk appetite with a sharp sell-off on Wall Street. Rising interest rates have particularly weighed on tech companies, with SoftBank Group (down 1.8%), Laser Technology (down 2.1%), Tokyo Electron (down 1.4%), Recruit Holdings (down 2.3%), and NTT Data Corp (down 7.2%) Shares of other companies fell sharply. Resource-related stocks fell, and commodity prices tumbled overnight, including Inpex Corp (-8%), Sumitomo Metal (-5%), and Nippon Steel (-1.6%). Other index heavyweights also fell, including Japan's Yusen (-4.6%), Sony Group (-3.1%), and Toyota Motor (-3%). Meanwhile, Japanese stocks fell from earlier on news that Japan will retain its stakes in two Russian oil and LNG projects while phasing out Russian oil imports. Australia S&P/ASX 200 index fell 0.98% to close at 7,051, its lowest level in two months, amid a sharp sell-off on Wall Street as concerns over higher interest rates continued to dent risk appetite. Rising interest rates have particularly weighed on tech companies, with Brainchip Holdings (-15.7%), Block Inc (-8.5%), NextDC Ltd (-3.4%), and Pointsbet Holdings (-6%), and Siteminder Ltd (-4.5%) among others. The company suffered substantial losses. Energy and mining stocks also fell on the overnight plunge in oil and iron ore prices, including Woodside Petroleum (-2.6%), Santos Ltd (-1.7%), Beach Energy (-3.9%), BHP Billiton Group (down 2.6%), Rio Tinto (down 3.6%) and Fortescue Metals (down 2.7%). Gold and clean energy-related stocks also fell, led by Newcrest Mining Corp (down 3.6%), Polaris (down 3.6%), Pilbara Mining Corp (down 1.2%), Lynas Rare Earth Corp. (down 1.8%), and Elken Ltd (down 3.3%).   REVIEWING ECONOMIC DATA:  Looking at the last economic data: - US: The U.S. IBD/TIPP economic optimism index fell to 41.2 in May 2022 from 45.5 in April and was just above 41 in March. The six-month outlook for the U.S. economy fell 6.5 points to 33.2, the lowest level since August 2011; the index of support for federal economic policy fell 4.4 points to 40.1, the lowest level since December 2015. In addition, as gas prices continued to rise after Russia invaded Ukraine, inflation hit a 40-year high of 8.5%, and the personal finance sub-index slipped 1.8 points to 50.4. Household financial stress reached its highest level since April 2020, when the pandemic began the story. - US: The U.S. NFIB Small Business Optimism Index remained unchanged at 93.2 in April 2022, unchanged from March and at levels not seen in two years. More business owners expect business conditions to worsen over the next six months, but the share of businesses raising sales prices has fallen from a record high in March. More business owners expect actual sales to be higher in the near term. - EU: In May 2022, the Eurozone ZEW Economic Confidence Index rose sharply to -29.5 from a two-year low of -43 in April. Eurozone inflation expectations fell 36.5 points to -10.6, although the indicator of current economic conditions in the eurozone fell 6.5 points to -35. - GE: Germany's ZEW Economic Confidence Index rose to -34.3 in May 2022 from a two-year low of -41 in April. With a slightly less pessimistic outlook on Germany's economic situation, the data beat market expectations of -42. In contrast, the current conditions index fell further to -36.5, its lowest level in a year and worse than the forecast of -35. Most analysts say China's Covid-19 restrictions will weigh heavily on future growth in Germany, with the European Central Bank expected to raise short-term interest rates over the next six months while inflation falls from its current very high levels. - IT: Industrial production in Italy in March 2022 was unchanged from the previous month, rising 4% in February, while the market expected a contraction of 1.9%. Increases in consumer goods (1% vs. 5.3% in February), energy (2.7% vs. 0.9%), and capital goods (0.4% vs. 2.8%) offset declines in intermediate goods output (-0.7% vs. 3.5%). Industrial production rose 3.4 percent year-on-year, up from an upwardly revised 3 percent in the previous month. - AU: Australian retail sales rose 1.6% month-on-month in March 2022, after rising 1.8% a month earlier, unadjusted for preliminary data. The latest data marks the third consecutive month of growth in the retail sector as the economy recovers further from the COVID-19 pandemic. Retail sales of household goods (3.4% vs. 2.3% in February), apparel, footwear (0.5% vs. 11.2%), department stores (4.1% vs. 11.1%), cafes, restaurants, and takeaway food (2% vs. 9.7%) sales continued to grow. In addition, food retail sales rebounded (0.5% vs -2.6%). Sales rose in all states: NSW (1.8%), Victoria (0.6%), Queensland (3.4%), Western Australia (1.9%), Tasmania (0.7%) ), the Northern Territory (1.9%) and the Australian Capital Territory (1.1%). Retail sales rose 1.2% in the first quarter and 7.9% in the fourth. - AU: The NAB Business Confidence Index fell to 10 in April 2022 from a five-month high of 16 in March but remained above the long-term average. Sentiment eased sharply in transportation and utilities, entertainment, and finance. Meanwhile, business conditions rose strongly (20 to 15 in March) as sales (27 to 23) and profitability (22 to 12) continued to strengthen, while employment held steady (10). The gains were aided by a long-awaited recovery in entertainment and personal services and improved conditions in the manufacturing sector. Forward orders fell slightly (9 vs. 12), while capacity utilization rose (83.9% vs. 83.4%). At the same time, cost pressures continued to climb after reaching record growth rates in March, with labor costs rising 3.0% quarterly and procurement costs 4.6% quarterly, both record highs. "Overall, the survey highlights the continued strength of economic activity and the breadth of the recovery," said NAB chief economist Alan Oster. - UK: UK retail sales fell 1.7% year-on-year in April 2022, a further slowdown from the 0.4% drop the previous month, as higher living costs hit consumer confidence and dampened consumer spending. Helen Dickinson, chief executive of the BRC, said: "High-priced items have been hit the hardest, as consumer spending on furniture, appliances and other household items dominates, coupled with delays in shipments from China. ". She added: “Customers face a tough year, with the Bank of England forecasting inflation to hit above 10%. Retailers are experiencing higher prices due to higher commodity prices, rising transport costs, labor shortages, port delays, and the war in Ukraine. costs. Further headwinds are coming, such as rising global food prices, which rose 13% in March-April.” - NZ: Electronic card transactions in New Zealand surged 7% in April 2022 from the previous month after falling for two consecutive months. This was the most significant monthly increase in seasonally adjusted credit card spending since November, driven by higher purchases of consumer goods (5.2%), apparel (16.8%), and fuel (3.3%). On an annual basis, credit card spending rose 2.1% in April, reversing a 0.5% decline. - RU: Russia’s GDP is expected to contract by 12% in 2022, according to internal forecasts by the Ministry of Finance, far exceeding the Ministry of Economy’s forecast of 8%. It was the worst contraction since Russia's transition to a market economy in 1994, as the country felt the effects of sweeping Western sanctions. Significant restrictions include an oil embargo in the US and a fossil fuel phase-out in the UK, while several EU utilities seek alternative sources of natural gas. In addition, several foreign companies have left Russia, while large banks have withdrawn from the SWIFT payment system, and their assets have been frozen. Uncertainty over forecasts remains high as the European Union proposes to phase out oil imports over six months in what could be the biggest hit to Russia's economy so far, with more onerous restrictions likely to follow. According to the central bank, annual inflation is expected to accelerate to 18-23% in 2022.   LOOKING AHEAD:    Today, investors will receive: - USD: NFIB Small Business Index, FOMC Member Williams Speaks, Treasury Sec Yellen Speaks, IBD/TIPP Economic Optimism, President Biden Speaks, FOMC Member Waller Speaks, and FOMC Member Mester Speaks. - EUR: Italian Industrial Production m/m, ZEW Economic Sentiment, German ZEW Economic Sentiment, and German Buba President Nagel Speaks. - GBP: BRC Retail Sales Monitor y/y. - JPY: Household Spending y/y, and 10-y Bond Auction. - AUD: NAB Business Confidence.   KEY EQUITY & BOND MARKET DRIVERS: - GE: Germany's 10-year bond yield has retreated from a nearly eight-year high of 1.2% on May 9 but remains well above 1% amid long-standing worries about high inflation data in Europe and expectations that major central banks will Tight monetary policy. Preliminary data showed that inflation in the eurozone hit a record 7.5% in April, while Germany was at its highest level since 1981. Meanwhile, Germany's ZEW Economic Sentiment Index rose to -34.3 in May, well above market expectations for further declines. ECB policymakers had previously suggested that asset purchases could end as early as July, a condition for raising interest rates. - US: U.S. stock futures, which track the broader market, rose on Tuesday as falling buyers emerged to stem the massive tech rout over the past few days. Still, market sentiment was clouded by concerns over the impact of aggressive tightening against a backdrop of soaring inflation and a challenging growth outlook. All eyes are now on the US inflation report for May for further insight into the central bank's rate hike path. On Monday, the S&P 500 fell 3.2% in regular trading, and the Dow fell 1.99% to hit its lowest level since 2021. The Nasdaq Composite also fell 4.29%, accelerating the tech index's slide to its lowest point since late 2020. - UK: FTSE 100 futures traded in the green on Tuesday, tracking European and U.S. peers higher and attempting to rebound from a 2.3% drop in the previous session, despite volatility as investors fretted about the global economic outlook and a possible slowdown, stagflation or recession. Sex will continue. UK retail sales fell for a second straight month in April as rising living costs hurt consumer confidence and spending, data from the British Retail Consortium (BRC) showed. Traders are now awaiting data on GDP growth from the Office for National Statistics on Thursday for an update on the health of the UK economy.       STOCK MARKET SECTORS: - High: Information Technology, Communication Services, Energy. - Low: Industrials, Real Estate, Financials, Consumer Discretionary, Consumer Staples.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - CNY: The offshore yuan depreciated by more than 6.75 yuan against the dollar on May 9, hitting a fresh 18-month low and extending a steep loss in April, as fears of a global economic slowdown and expectations of rising global interest rates prompted investors to turn to the greenback. Safety. China's zero-tolerance approach to the coronavirus has also weighed on the yuan as authorities in Shanghai extended the lockdown until the end of May, and Beijing further expanded mass testing to an almost daily routine. New data showed that China's export growth slowed to its weakest pace in nearly two years, while imports were little changed in April as stricter and broader coronavirus restrictions halted factory production and weighed on domestic demand. Economists have lowered their forecasts for China's full-year GDP growth to reflect the economic damage from the coronavirus outbreak, putting downward pressure on the yuan. - USD: The U.S. dollar index rose above 104 on Monday, hitting a fresh 20-year high, as expectations of further monetary policy tightening by the Federal Reserve to fight inflation and worries about slowing global growth drove investors to the greenback's safety. Uncertainty surrounding the inflation outlook, the Ukraine war, and the Chinese blockade fuel safe-haven demand for the dollar. Meanwhile, the Federal Reserve last week raised its benchmark funds rate by 50 basis points, and the vital jobs report reinforced bets for a further sharp hike. Investors are now looking forward to Wednesday's new inflation data for the central bank's likely next move. Futures markets expect the Fed to raise 75 basis points at its next meeting in June and tighten by 200 basis points.   CHART OF THE DAY: On Tuesday, the FTSE 100 rose 0.4% to close at 7,423, partially recovering from a 2.3% drop in the previous session, boosted by Melrose industrials and financials, even as investors worried about the global economic outlook possible stagflation, volatility will continue. UK retail sales fell for a second straight month in April as rising living costs hurt consumer confidence and spending, data from the British Retail Consortium (BRC) showed. Traders are now awaiting data on GDP growth from the Office for National Statistics on Thursday for an update on the health of the UK economy. On the corporate front, utility Centrica said its full-year earnings would be at the top of its forecast range of 10.8p per share on the back of strong operating results in the first four months of 2022, driving its shares up more than 5%. - UK FTSE 100 index - D1, Resistance (target zone) around ~ 7737, Support around  ~ 7150