Economy Expanding

Market Overview

1. The latest GDP data reveals that the economy expanded by 1.3% in the first quarter, surpassing the initial estimate of 1.1%. This growth was primarily driven by stronger-than-expected consumer spending, although it was partially offset by a decline in inventory investment. Additionally, both the GDP price index (deflator) and core Personal Consumption Expenditures (PCE) prices were revised higher compared to the initial estimates. The GDP price index reached 4.2%, while the core PCE prices rose to 5.0%.
   

2. Big Tech stocks are coming back into favour with institutional investors. Mutual funds started the quarter with notably lower exposure to the stocks that have been driving this year's market rally. As these funds approach their cash limits, they are now beginning to deploy that cash into Big Tech stocks. Simultaneously, hedge funds have increased their allocation of tech stocks, raising it from 9.7% to start the year to 15.5%.
   

3. OPEC+ is scheduled to convene in the upcoming week to deliberate on oil production levels. Saudi Arabia has indicated that production cuts are a possibility, while Russia has expressed the view that no immediate adjustments are required. In addition to the discussions within OPEC+, oil traders are considering the impact of a stronger US dollar and apprehensions about sluggish demand growth, primarily driven by concerns surrounding China. These factors pose challenges to oil prices.