U.S. Consumer Spending hits record low 

For the second consecutive month it was announced that U.S. consumer spending hit a record low. With the rise in economic uncertainty, Americans opted to save instead of spend.  This has led to the savings rate reaching all-time highs. Consumer spending which contributes close to 75% of U.S. GDP  plunged by 13.6% in the month of April, the biggest monthly drop since the government began tracking this data in 1959.

As a result, Wall Street fell on Friday as investors reacted to the consumer data.

The Dow Jones fell 0.98%, with the S&P 500 dropping 0.61% in value. After tech companies slipped on Thursday, the Nasdaq consolidated and remained flat to end the week.

Powell promises further Fed action

On Friday, Jerome Powell promised that the Fed will continue to support the U.S. economy amid the COVID-19 crisis. However, as this promise has been made on a few occasions in recent weeks, markets have now taken the stance of “less talk, more action”.

Although the impact of Powell’s words has waned somewhat.  The speech helped to cushion the blows U.S. indices faced on Friday from weak consumer spending data, and further tensions with China.

Trump set to talk “CHINA!”

President Trump tweeted that he will be holding a press conference regarding China later today. This has come as China warned the U.S. of countermeasures and added that a U.S. bill proposing to sanction Chinese officials would be considered as severely interfering in its internal affairs.

Markets are watching this and may react to potential signs of these tensions not only continuing but being heightened.

Biggest Bull

Gold: Gold rallied on Friday as U.S. data showed that consumer spending had reached all-time lows. As a result, the flight to safety reignited, leading to a $22 rise in Gold prices.

Biggest Bear

S&P500: With Gold rallying, U.S. indices sold off on Friday. the S&P500 once again struggled to break the 3068 resistance, and as a result dropped by 0.61%. Depending on the upcoming Trump press conference, could this weakness continue?

Quote of the day:

“Losses are necessary, as long as they are associated with a technique to help you learn from them”

David Sikhosana