The ZEW Indicator of Economic Sentiment for Germany increased to 47.1 in May 2024, the highest since February 2022, from 42.9 in April, and beating forecasts of 46. The current conditions subindex also improved to -72.3 from -79.2, compared to expectations of -75.8. This marks the tenth consecutive month of rising confidence among financial experts, driven by signs of economic recovery in Germany and stronger-than-expected GDP growth in Q1. Additionally, improving economic conditions in the Euro Area and China have contributed to a better outlook. Expectations for domestic consumption, as well as the construction and machinery sectors, have seen substantial increases.

Stock futures in the US turned lower on Tuesday, with contracts on S&P 500 down 0.2%, the Nasdaq 100 retreating 0.5% and the Dow Jones falling more than 70 points, following a hotter-than-expected PPI report. Factory gate prices rose 0.5% in April, beating expectations and marking a turnaround from March's decline. The core rate also exceeded estimates at 0.5%. Meanwhile, the earnings season continues with Home Depot falling almost 0.9% in premarket trading after a revenue miss. Shares of Alibaba dropped more than 4% after the Chinese giant’s net profit plunged in the fiscal fourth quarter ended in March. On the other hand, Gamestop continued to rally and was up more than 51% before the opening bell, following a 74.4% surge on Monday. Similarly, AMC Entertainment jumped 51%, extending a 78.4% rise the day before.

The NFIB Small Business Optimism Index in the US rose to 89.7 in April 2024, slightly recovering from a more than 12-year low of 88.5 in March and beating forecasts of 88.1. Although down 3 points from March, inflation remained the primary concern for 22% of owners surveyed, retaining its status as the topmost challenge in their businesses. At the same time, the number of owners planning price hikes decreased by 7 points to a net 26%. Also, net 12% of owners reported planning to create new jobs in the next three months, up 2 points, and 40% reported job openings they could not fill in the current period, up 3 points. Finally, the net percent of owners who expect real sales to be higher improved by 6 points to -12%. “Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees. Overall, small business owners remain historically very pessimistic", said Bill Dunkelberg, NFIB Chief Economist.

Both the STOXX 50 and the STOXX 600 were little changed on Tuesday, following a lackluster session the day before, as traders continue to await key inflation reports for the US which will help to clarify when the Fed could start lowering interest rates. Investors are also focused on earnings reports and corporate news. Shares of Delivery Hero soared more than 20% as Uber will acquire its foodpanda delivery business in Taiwan for $950 million in cash. On the other hand, Bayer lost 1.4% despite an earnings beat and German arms maker Rheinmetall was down almost 6% after posting sales and earnings below forecasts.

India’s wholesale prices increased by 1.26% year-on-year in April 2024, accelerating from a 0.53% rise in the previous month and above market estimates of a 1% gain. It marked the sixth consecutive period of wholesale inflation and the fastest pace since last March 2023 due to a faster rise in food and primary articles amid a rebound in fuel prices and softer falls in manufacturing prices. Primary articles (5.01% vs 4.51% in March) and food index (5.52% vs 4.65%) advanced faster, due mainly to higher onion (59.75%), potato (71.97%), and vegetables (23.60%). Meanwhile, fuel and power prices rebounded (1.38% vs -0.77%) amid softer drops in LPG (-9.40% vs -10.19%), HSD (-1.86% vs -3.51%), and Petrol (-0.63% vs -0.94%). At the same time, manufacturing prices declined less (-0.42% vs -0.85%), weighed by basic metals (-3.65% vs -5.34%), chemical and chemical products (-3.61% vs -4.64%), and textiles (-1.24% vs -1.68%). Monthly, wholesale prices were up 0.79%, following a 0.40% gain in March.

The Japanese yen weakened again past 156 per dollar, hitting its lowest levels in two weeks and stoking fears that Japanese authorities could intervene again to support the currency. Japan’s Finance Minister Shunichi Suzuki said the government is coordinating with the Bank of Japan to ensure aligned policy objectives when it comes to foreign exchange. He added that they are taking all possible measures to closely monitor yen moves. Earlier this month, the yen rallied sharply after weakening to 160 per dollar on suspected government intervention, with BOJ data suggesting it spent nearly $60 billion to defend the currency. However, the yen has now retraced about two-thirds of those gains as a massive interest rate differential between Japan and other major economies incentivized investors to borrow yen and invest in higher-yielding currencies.