European equity markets rallied in May, posting strong gains as market sentiment and risk appetite increased, while the political uncertainty in Ukraine started to ease. The euro strengthened today more than 0.25%, trading at 1.37 against the US dollar, showing signs of an upside correction.
On the macroeconomic front, US personal consumption fell by 0.3% in April but personal income rose by 0.3%, in line with expectations. The Chicago PMI increased to 65.5 in May against expectations of a modest 61.0, while the results from the University of Michigan/Thomson Reuters survey were below estimates with consumer sentiment falling to 81.9 in May compared to 82.5 in April.
Crude oil prices retreated today following a fairly mixed DOE oil inventories report yesterday but the WTI front month contract has been set for its longest stretch in monthly gains since April 2011, as the crisis in Ukraine supported oil prices during the period of May.
It has been a fairly volatile month for equity and commodity markets, while the stronger US dollar has weighed partially on market sentiment. However, the US economic data is improving, suggesting the potential for further gains in the short-term.
As we are heading into the summer season, we expect trading volumes to be fairly thin. However, investors will be looking into the macroeconomic indicators as well as any resolution to the Ukrainian political issue for further direction across equity and commodity markets.