Markets rally as traders weigh latest US data, rates outlook

Markets rose Monday as traders weighed a bigger-than-expected drop in US retail sales and the prospect of further Federal Reserve monetary tightening.

The mood was helped by forecast-beating earnings from US banking titans that eased concerns about the sector after last month’s turmoil that saw three regional lenders go under.

Investors built on last week’s broad rally that came on the back of data showing inflation falling quicker than estimated last month, which fanned hopes the Fed will bring its interest rate hiking campaign to an end soon.

Analysts said that while the one percent drop in retail sales — double what was forecast — could give the US central bank more room to pause, it also revived worries that the world’s top economy could tip into recession.

Despite figures pointing to prices falling, a survey by the University of Michigan on Friday showed consumers’ expectations for inflation rose this month to 4.6 percent annually, from 3.6 percent in March.

Meanwhile, Fed governor Christopher Waller dented hopes the bank will ease back on its tightening campaign soon, saying on Friday that rates should continue going up as inflation remained elevated.

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