A slight easing of monetary policy in China sparked a brief market recovery in the U.S., but U.S. stocks are still on course for their lowest weekly close since March 2021. U.S. President Joe Biden is expected to sign a $40 billion aid bill for Ukraine after the Senate voted in favor of it on Thursday, while the ruble hit a 4-year high. European economic data continues to deteriorate, with German producer price inflation hitting 33%. And oil prices are drifting as the market is stuck between fears of supply shortages and concerns about weakening demand. Here’s what you need to know about the financial market on Friday, May 20.

1. CHINA RATE CUT

China’s central bank kept its one-year prime lending rate unchanged, but its benchmark 5-year mortgage rate, as calculated by a group of lenders, was cut by 0.15%.

The news was taken as a sign of monetary easing by a market hungry for any good news at the end of a week dominated by growing fears of a US recession. Chinese stock indexes rose as much as 2.5% and the offshore yuan strengthened 0.8%.

Nevertheless, the one-year prime rate is more important because it has the most direct impact on the broader credit in the Chinese economy, and a cut in the 5-year mortgage rate does little to end the housing crisis, with affordability ratios still off the charts.

The relative inaction of the People’s Bank of China amid growing pressure from the government to support the economy is noteworthy. Earlier this week, the head of the bank’s monetary policy department was removed from his post due to “suspected serious violation of laws and discipline.”

At the corporate level, shares in luxury goods makers in Europe fell after Richemont chairman Johann Rupert warned that China’s economic problems will last “longer than it appears”. About 40% of Richemont’s boutiques in that country are now closed.

2. UKRAINE AID BILL PASSES; RUBLE AT 4-YEAR HIGHS

U.S. President Joe Biden is expected to approve a $40 billion aid bill for Ukraine after Republican senators dropped their objections to it.

The move comes as G7 finance ministers and central bank governors meet to discuss, among other things, the cost of supporting Ukraine in a conflict that looks set to drag on for months to come. Ukraine’s financing needs are estimated in the U.S. at $7 billion a month.

And in Russia, the official ruble exchange rate hit its highest level since 2018. This was largely the result of a growing current account surplus. The central bank eased restrictions on converting the ruble into other currencies on Thursday, but left in place restrictions on converting into dollars and euros.

3. U.S. MARKET TO OPEN HIGHER; PALO ALTO EARNINGS BOOSTED SENTIMENT

Stock indices in the US will open in the plus side on Friday, supported by Chinese news, but it all looks more like a short-term bounce given the lack of any major changes in the underlying fundamentals.

By 06:20am ET (10:20am GMT), the Dow futures were up 292 points, or 0.9%, while the S&P 500 futures were up 1.1% and the Nasdaq 100 futures were up 1.5%.

However, the S&P is still on track to end the week below 4,000 points for the first time since March 2021 after both Federal Reserve officials on opposite ends of the political spectrum – Esther George and Neel Kashkari – downplayed the impact of stock market events on the Fed’s ideas on Thursday.

Palo Alto Networks shares are likely to be in the spotlight after the cybersecurity company’s earnings brought much-needed relief to the market following dismal retail sector reports after Thursday’s close.

Foot Locker and consultant Booz Allen Hamilton will be first on the modest list of earnings reporters before the stock opens.

4. EUROPEAN DATA SHOCK

Economic data in Europe is looking more and more worrying by the day.

According to the GfK index released earlier, consumer confidence in the UK has hit a record low, surpassing levels seen at the height of the financial crisis and recession of 2008-2009 and at the start of the pandemic in 2020. Whether this is true, given that the country’s unemployment rate is at its lowest level in 50 years, will remain in question. Meanwhile, UK retail sales unexpectedly rose in April but did not reverse the long-term downward trend.

A less clear issue is that inflationary pressures in the eurozone’s largest economy show no signs of abating. German producer price inflation accelerated to a new all-time high of 33.5% in April, while its monthly growth slowed to only 2.8%, twice as much as expected.

Philip Lane, Chief Economist at the European Central Bank (who usually takes a dovish stance) may comment on these developments when he speaks at 08:00 Eastern Time (12:00 GMT)

5. OIL PRICES DRIFTING; RIG COUNT REPORT AND CFTC DATA AWAITED

Crude oil prices are drifting on Friday and are expected to end the week unchanged as faint hopes for an end to the quarantine in Shanghai over COVID-19 and the realization that U.S. gasoline inventories in May are at their lowest level in 14 years are counterbalanced by concerns about the demand outlook as gasoline prices are stuck at record highs and signs of consumer fatigue are seen in nearly every retailer report this week.

By 06:30 a.m. ET (10:30 GMT), WTI crude futures were up 0.1% to $109.94 a barrel, while Brent crude rose 0.3% to $112.32. Both benchmarks will end the week with small gains.

U.S. rig count data from Baker Hughes and net positioning data from the CFTC will round out the week.