US stock futures rallied on Friday, recovering losses from the previous session on the back of strong earnings from mega-cap tech names Alphabet and Microsoft. In extended trading, Google-parent Alphabet surged 12% on better-than-expected first-quarter earnings, the authorization of its first even dividend and a $70 billion buyback. Microsoft also popped 5% on upbeat quarterly results and artificial intelligence-related boost. In regular trading on Thursday, the Dow fell 0.98%, the S&P 500 dropped 0.46% and the Nasdaq Composite tumbled 0.64%. Those losses came as latest data showed that the US economy slowed down sharply and pointed to persistent inflation. In addition to the economic data, disappointing earnings reports from companies like Meta Platforms and IBM also weighed on sentiment. Meta's stock dropped 10.5% after issuing a weak revenue outlook, despite reporting better-than-expected first-quarter results. IBM also declined 8.2% following a revenue miss.

The core consumer price index for the Ku-area of Tokyo in Japan fell sharply to 1.6% year-on-year in April 2024, hitting its lowest level since March 2022 and coming in way below forecasts of 2.2%.Tokyo’s inflation rate also went below the Bank of Japan’s 2% target for the second time this year, reducing pressure on the central bank to raise interest rates again. The BOJ is widely expected to keep short-term rates unchanged at its April policy meeting, although the yen’s weakness raised speculation that the central bank could hike rates again this year. Tokyo’s inflation reading is widely considered as a leading indicator of nationwide price trends, with national-level CPI data following in about three weeks. Meanwhile, the headline CPI slowed sharply to 1.8% in April, the lowest reading since January.

The GfK Consumer Confidence indicator in the United Kingdom rose to -19 in April 2024 from -21 in March, improving for the first time in three months and coming in above market expectations of -20. The overall index has been bouncing between -24 and -19 for the last six months, indicating slow progress as economic uncertainties weighed heavily, although it is a vast improvement compared to last year when the overall index score stood at -30. Four of the five measures that make up GfK’s Consumer Confidence indicator rose in April, with the index for personal financial situation over the next 12 months being the sole measure in positive figures. Joe Staton, client strategy director at GfK, said: “Consumer confidence can be a very slow-moving creature and the past six months underline that. At least there’s an air of forgiveness with consumers delivering softer verdicts on how they look back at the past year regarding their personal finances and the wider economy.“

The GfK Consumer Climate Indicator for Germany rose to -24.2 heading into May 2024 from a marginally revised -27.3 in the previous period, above market forecasts of -25.9. It was the highest reading in two years, with income expectations surging to their top since January 2022 (10.7 vs -1.5 in April). Also, there were rises in both economic prospects (0.7 vs -3.1) and the propensity to buy (-12.6 vs -15.3). Simultaneously, the tendency to save increased to hit an extreme high (14.9 vs 12.4), as uncertainty about development in Europe's biggest economy persisted. Overall, while sentiment has recovered, it stayed at a subdued level. "In times of multiple crises and a lack of confidence in future development, there is still a lot of uncertainty among consumers," said Rolf Bürkl, consumer expert at NIM. He added that there was still no strong stimulus for domestic demand.

The core price index for personal consumption expenditures in the United States, which excludes food and energy, rose by an annualized 3.7% in the first quarter of 2024, accelerating from the 2% increase in the previous three-month period and above an estimate of 3.4%. Also, the headline index rose by an annualized 3.4%, accelerating from a 1.8% increase in the previous three-month period.

The US 10-year Treasury note yield rose to above 4.7%, the highest since early November, as recent data prompted traders to scale back their expectations regarding the timing of a Fed rate reduction, now completely factoring in the first cut by December. On one hand, the US economy grew much less than expected in Q1 but on the other inflationary pressures remained elevated. The US economy expanded an annualized 1.6% in Q1 2024, the least since a contraction in Q2 of 2022, and below forecasts of 2.4%. Meanwhile, the core PCE price index, surged by 3.7% in Q1, accelerating from the 2% increase in the previous three-month period and above the estimate of 3.4%. Finally, US jobless claims fell to 2-month low, underscoring the strength in labor market.