Key facts
- U.S. equities advanced for nine consecutive weeks.
- Crude oil prices fell approximately 7%.
- U.S. factory orders increased 4.8% in April.
- U.S. nonfarm worker productivity growth in Q1 was revised down to a 0.3% annualized rate.
- U.S. Q1 unit labor costs increased at a downwardly revised 1.8% rate.
- U.S. Q1 GDP growth was revised down to 1.6%.
- Gold prices declined by less than 2% in May.
- Gold is up 5% year-to-date.
- Australia's economy decelerated last quarter.
- Bank of Canada Senior Deputy Governor Carolyn Rogers cautioned against over-reliance on GDP data.
U.S. equities have advanced for nine consecutive weeks, with artificial intelligence beneficiaries such as Micron, AMD, and Dell driving market gains. Hopes for a U.S.-Iran truce and indications of disinflation in Personal Consumption Expenditures (PCE) data have supported the market's upward trend. Crude oil prices experienced a notable decline of approximately 7%. Despite strong demand for AI servers, concerns about valuations and consumer stress signals are emerging.
Global stock markets presented a mixed picture, with Wall Street indices trading with varying performance. The S&P 500 and the Dow Jones Industrial Average recorded gains, while the Nasdaq Composite saw a nominal decrease. Small-cap stocks demonstrated outperformance. In Australia, the economy decelerated in the last quarter, though a surge in data center investment helped to mitigate the impact of higher fuel costs and rising interest rates. U.S. factory orders saw a significant increase of 4.8% in April, marking the largest monthly gain since May 2025, largely attributed to a surge in commercial aircraft orders. However, core capital goods orders experienced a decline.
Revisions to U.S. Q1 economic data indicate a downward adjustment in nonfarm worker productivity growth to a 0.3% annualized rate, the slowest pace since Q1 2025. Unit labor costs also saw a downward revision, increasing at a 1.8% rate. On a year-over-year basis, productivity grew by 2.8%, while unit labor costs increased by 0.5%. Q1 Gross Domestic Product (GDP) growth was revised down to 1.6%. Recent data suggests a stronger-than-expected U.S. labor market performance, indicating a positive upswing after several months of net job losses. Furthermore, latest data points to a significant acceleration in U.S. nominal growth, signaling a robust expansion in the country's economic output.
Gold prices experienced a decline of less than 2% in May, marking the third consecutive monthly drop. The ongoing Middle East conflict contributed to rising energy markets and inflation concerns, subsequently reducing expectations for Federal Reserve rate cuts. Some central banks have reportedly been liquidating gold reserves. Despite the May pullback, gold remains up 5% year-to-date. Bank of Canada Senior Deputy Governor Carolyn Rogers cautioned against an over-reliance on GDP data, noting that while two consecutive quarters of contraction can define a recession, preliminary April data suggests a rebound. She advised against placing too much weight on any single economic indicator.