Another intra-day tumble saw Wall Street erase early gains after the White House announced their support to suspend intellectual property rights for COVID-19 vaccines amid extraordinary circumstances. A similar measure was proposed by the WTO back in October, however then President Trump had firmly opposed such plans alongside the UK, EU and Switzerland. As expected, the decision hit pharmaceutical companies hardest dragging down overall sentiment in markets. Nasdaq again hit hardest recording 5 consecutive days of declines.
Final statements amid the G-7 meeting saw foreign ministers take a last dig at China, voicing concerns against human right abuses, encroachment onto Taiwan’s borders and cyber espionage. As President Biden continued his predecessor’s firm stance towards China, European allies have begun to follow suit.
In Europe, broad-based benchmarks recovered previous days losses following U.S. Treasury Janet Yellen’s correction overnight whilst the FTSE100 hit a 15-month high. Meanwhile, Asia opened mixed as Japan and China resumed trading after a long weekend holiday. The Hang Seng despite a volatile session is set to close unchanged. Investors are awaiting whether China’s economic czar, Vice Premier Liu He will bail out the troubled Chinese financial conglomerate Huarong. Allowing the firm to collapse could ignite a financial crisis. Elsewhere, the Nikkei rallied 1.2% and S&P200 fell 0.9%.
Crude oil fell but remained above $65 despite inventories in greater than deficit than anticipated. The U.S. dollar index was mute, gold remains in a tight range between $1,760 – $1,800 and bitcoin crept back to $57,000.
Amid an event host by The Atlantic magazine, remarks by U.S. Treasury Secretary Janet Yellen sparked a mid-session tumble on Wall Street when she noted “that interest will have to rise somewhat to make sure that our economy doesn’t overheat” alluding to President Bidens’ rounds of pandemic, infrastructure, and welfare expenditure. The point was further echoed by White House Press Secretary Jen Psaki who said the administration views “inflationary risk incredibility seriously. Whilst the Dow Jones recovered losses by sessions end, Nasdaq suffered their worst daily loss since March as tech juggernauts came under pressure. Contagion from Janet Yellen’s comments throughout Europe as tech firms dragged down broad-based benchmarks.
In Asia, indices and futures began recovering overnight losses as Yellen clarified herself in a later event hosted by Wall Street Journal saying she was not over-stepping her role or recommending interest rate interests and that “if anyone appreciates the independence of the Federal Reserve, I think that person is me”.
Meanwhile, global geopolitical tension is on the rise following the G7 foreign minister meeting in London, of whom Germany, Italy and France is considering following U.S. footsteps to counter China’s economic coercion. Though the U.K. remains reluctant as Prime Minister Boris Johnson hopes to strike a balance between East and West.
On the coronavirus front, in response to surging cases of global COVID variants, Singapore has tightened social distancing measures alongside border controls. Whilst Vietnam will prolong the length of quarantine.
Despite volatility across global indices, the U.S. dollar index stayed steady. Crude oil advanced $1.60 to over $66 following reports of a potential commodity super cycle as poor weather and distribution bottlenecks affect supply. Gold retreated back below $1,790 and bitcoin continues out of favourability to settle at $54,500.
Corporate earnings drove mixed results on Wall Street with both the S&P500 and Dow Jones gaining 0.3% and 0.7% respectively whilst Nasdaq lost half a percent. Quarterly earnings from cyclical firms on average rose 53% YoY crowding out risk appetite for tech darlings, of whom despite upbeat results thus far traded lower on Monday. During an online conference hosted by the National Community Reinvestment Coalition, Federal Reserve Chairman Powell remarked the U.S. economic outlook has “clearly brightened” and that although there is no precise formulation in determining full employment, the central bank will be very transparent if we are close.
Likewise, European markets surged as manufacturing PMI data across the bloc maintained elevated levels. Consumer demand is surging fuelled by members states re-opening from national lockdowns improving overall prospects. The vaccine distribution issues which plagued the continent in Q1 has dissipated as total jabs catch up to UK and US counterparts.
With Japanese banks observing Greenery Day and China closed for labour day, activity is Asia was dampened though the Nikkei and Hang Seng etched out gains intra-day. The Reserve Bank of Australia held monetary policy unchanged as expected, forecasting a pickup in inflation but only modestly incremental. The S&P200 rose slightly, higher by 14 index points.
On the coronavirus front, alongside India, fresh waves of new and more contagious variants are spreading throughout developing economies like Thailand and Laos as government complacency and authorities lacking medical resources being the main driver.
The U.S. dollar index head steady, crude oil up by $1 to $64.50 and gold rose sharply by $2.50. Whilst alternative crypto currencies like Ethereum reach record highs, bitcoin continues to stagnate around the $56,000 level.
Inflation concerns back in the foray following a mix of upbeat global economic data releases on Friday. In unison, Wall Street ended Friday in negative territory with the S&P500 retreating from all-time highs, the Dow Jones in tight 500 index point consolidation since late April and Nasdaq underperforming lower by 0.5%. Despite Treasury Secretary Janet Yellen downplaying inflationary risk, personal income of U.S. households expanded double digits to historic highs whilst the PCE price index increases beyond market consensus spooked sentiment. Meanwhile the Federal Reserve Chair Jerome Powell continues to do this part, reassuring investors that creeping U.S. inflation is transitional and does not justify hawkish monetary policy endeavors.
In Europe, benchmarks followed America’s lead, declining for two consecutive sessions underpinned by increasing monthly CPI figures whilst a negative quarterly GDP see’s the bloc enter a technical recession. Likewise, the ECB echoed similar views of the Fed, denoting inflationary pressure as transient brought on by rising oil prices since last year November. Ahead of a host of UK elections, the FTSE managed to outperform global counterparts edging higher by 7 index points. On Thursday, votes on Scottish and Welsh parliament as well as mayoral constituents are expected to take part with the ruling conversative parties enjoying a healthy 44% support. Though, Sadiq Khan a labour incumbent is expected to win a second term as London’s mayor.
Mixed start to Asia despite bank holidays in China and Japan. The S&P200 reversed all its gains from open after a leading economic CPI indicator from the Melbourne Institute saw inflation remaining on elevated levels. Hong Kong tumbled 1.6% whilst Japan bucked the trend to climb higher by 0.5%.
The U.S. dollar index gained 0.7% as investors position cautiously, ahead of this week’s raft of policy decisions and central bank chief public remarks. Crude fell approx. $1.40 to $63.40 as India COVID-19 predicament clouds global outlook. Gold closed at $1,768 and bitcoin resumes its long-term uptrend, touching $58,000 intraday.
Federal Reserve sets a high bar before even considering pulling back quantitative easing after clarifying “substantial further progress” needs to be made towards full employments and inflation foremost. Whilst inflation expectation rose substantially in Q1, the central bank considers the increase as ‘largely transitory’. Despite reassurances by Chairman Jerome Powell, all in large, Wall Street only managed etch out minute gains. Cautious of the undertone a U.S. economic recovery has found solid footing amid a 2.25tn infrastructure plan on top of a 1.9tn pandemic relief plan followed by a proposed 1.8tn education and childcare plan unveiled just yesterday.
In Asia, Hang Seng opened higher amid Hong Kong’s parliament passing a tax concession bill for funds that would bolster competitiveness in financial markets. The tax concession would apply to carried interest distributed by private equity funds as well as remuneration paid in such firms. Despite Japanese markets closing in observance of Showa Day, futures rose by 0.35% intraday whilst the S&P200 was flat on lacklustre earnings releases. Elsewhere overnight European markets was mixed but ended largely in positive territory as investors weigh against the Fed’s current stance with a revised economic outlook.
The U.S. dollar lost ground against a mix of majors following the Federal Reserve’s reiteration of loose monetary policy. Crude oil crept higher to $63.60 as weekly inventories lowered, gold fluctuated between $1,763 – $1,783 and bitcoin halts its two-day advance to retreat to just above $54,000.
Wall Street took a pause near record highs as investors digest quarterly earnings and brace for FOMC tonight. Nasdaq underperformed slipping 0.5%, dragged lower by Microsoft and Tesla, whom despite earnings beating expectations have sold-off. Federal Chairman Powell is expected to repeat his longstanding message that irrespective of inflationary pressures, policy will remain accommodative until the economy and labour market recovers. Though a potential recalibration in quantitative easing could be on the horizon especially as the Bank of Canada last week become the first of G7 central banks to began scaling back purchases.
Results were mixed in Europe, but overall market action was subdued. The European Parliament will vote on the Brexit trade deal to approve the agreement and allow the EU to punish Britain with tariffs should post-Brexit obligation fail to eventuate. Meanwhile, the European Commission proposed new rules in response to the competitive threat foreign state-owned companies pose against domestic counterparts.
In Asia, the Japan’s Nikkei edged higher on better-than-expected retail sales figures. Australia’s S&P200 up 20 index points as inflationary pressures disappoint consensus giving ammunition for the RBA to remain accommodative.
Despite global demand outlook being uncertain arising from uncontrolled outbreaks in India, Brazil and now Philippines. The OPEC+ meeting concluded with member states in agreement to progressively increase production in the coming six months by 5.2m barrels a day. Still, crude rallied just over $1 to $62.95 on the news.
The U.S. dollar gained against a basket of majors as investors speculate potential groundwork could be laid by the Federal Reserve in tightening overall monetary policy. Elsewhere bitcoin closed back above $55,000.
Mixed start during Asia with Australia’s S&P200 and Japan’s Nikkei losing ground from open whilst the Hang Seng gains 0.3% with travel bubble opportunities opening up. The BOJ kept monetary policy endeavours unchanged, however have signalled giving up the 2% inflation target amid renew state of emergency measures. The Hong Kong – Singapore quarantine free travel bubble is set to launch on May 26th with one flight each direction per day. Australian and New Zealand will observe with keen eyes as they too initiate discussions with Hong Kong on future travel amenities.
Strong corporate earnings fuelled Wall Street’s advance ahead of the FOMC meeting on Wednesday. The S&P notched to record highs and the Nasdaq outperformed gaining 0.8% for the day. Despite companies releasing rosier outlooks for 2021, the Fed is expected to reassure investors that conditions do not warrant a withdrawal of monetary easing. Elsewhere, the White House has announced on Monday to distribute 60m doses of AstraZeneca’s vaccine to India to offer support in combatting COVID.
In Europe, whilst intra-day volatility was mute, benchmarks managed to etch out another day of gains. Italy eased restrictions on Monday with France contemplating the same scheduled for next month. The US and EU are in discussions of an open travel bubble to boost domestic tourism as EC President Ursula von der Leyen signalled vaccinated Americans should be able to travel to the bloc this summer.
Crude oil fluctuates between $60.50 - $62.50 as investors digest Brazil and India’s surge in coronavirus cases. The U.S. dollar index continues to lose ground against majors, gold rose to $1,780 and bitcoin bounces back to $54,700 with JP Morgan preparing to offer a bitcoin fund to wealthy investors.
After a volatile week, Wall Street settled somewhat flat near record highs. Strong corporate earnings and upbeat outlooks throughout the week proved the post-pandemic economic recovery is well underway. Only to be briefly overshadowed by fleeting shock headlines surrounding global resurging infection rates and a rumored capital gains tax hike in the America. Geopolitical tensions between the U.S. – Russia worsened following sanctions, whilst investors brush off elevated U.S. – China tensions to invest $6.6bn on IPOs in mainland and Hong Kong firms.
Across the Atlantic, European markets ended Friday’s session relatively unchanged from the day before. This despite solid earnings announcements and expanding manufacturing and services PMI releases. Meanwhile the U.K. managed to etch out a 0.3% gain on exceptional retail sales data as Prime Minister Johnson braces for allegations from a former aide that the government could have implemented a better response to the COVID pandemic during winter that would have prevented thousands of deaths.
In Asia, the Japanese Nikkei fell as much as 1% on open as the government enacted a state of emergency, beginning 25th April till 11th May, hoping to stifle recent case spikes. The affected prefectures include Tokyo, Osaka, Hyogo, and Kyoto. Election results saw Prime Minister Suga’s ruling LDP party lose all three by-elections ahead of general election held in 6 months. Recent scandals and poor performance in handling the pandemic chipped off a few percentage points in his approval rating. Elsewhere, the S&P200 gapped lower, and the Hang Seng subdued.
With yields finding equilibrium at pre-pandemic levels, demand for the U.S. dollar has become lackluster among majors as the index resumes its’ long-term downtrend. Crude fluctuates around $62 and likewise gold retreated to $1,776. Weekend trading saw bitcoin hit $47,000, its lowest level since March, before rebounding to over $52,000 during Asia session today.
President Biden’s plans to introduce a capital gains tax of 43.4%, essentially doubling of existing rates, for those earning $1 million or more jarred Wall Street as major benchmarks tumbled lower. Nasdaq down 0.9%, Dow Jones lost 0.7% and the S&P500 slipped 0.6%. The plan comes amid the administration’s fiscal splurge to ensure the American recovery stays on track and would also reverse some of the tax cuts previously passed by President Trump in 2017. UK and European markets were subdued after the ECB left monetary policy unchanged offset U.S. contagion.
In Asia, indices brushed off overnight sentiment to rally on open. Despite Hong Kong and Singapore calling off a planned air-travel bubble planned for Thursday, the Hang Seng rose 1.1% intraday. The postponement was triggered following an outbreak among Singapore’s migrant worker community. The Nikkei edged higher amid the government plans to implement a “short and powerful” state of emergency for big cities, just 3 months out from the Olympics. Daily cases in Japan has spiked to over 5,000 just yesterday.
Risk-off appetite saw the U.S. dollar gain among majors. Gold set to record their 3rd consecutive weeks of gains, currently at $1,780 whilst palladium retreated from all-time highs to settle at $2,828 as a tight supply situation pushed prices higher. Improving gasoline demand in the U.S. saw oil prices gain. This despite the COVID pandemic in India and Brazil reach crisis levels.
Bitcoin continues to receive a beatdown as it declines below $49,000 after just hitting $64,900 two weeks ago. A raft of potential regulatory reform in the U.S. from money laundering legislation to a capital gains hike has fuelled the outflow. Nonetheless, the crypto asset remains as one of the best performers for the past year, sitting on 625% gains.
Wall Street takes a breather from recent advances as the worsening global coronavirus situation weighs down optimism alongside Tesla tumbling after reports that one of its vehicles killed two passengers whilst potentially on autopilot hinders risk appetite. In Europe, profit taking took hold amid lacklustre major events and likewise, the FTSE100 retraced all gains from last Friday session as the UK discovers new cases of the COVID-19 variant from India on top of South Africa’s one.
The Hang Seng set to buck overnight sentiment rallying 0.8% since open. Keynotes from President Xi’s speech during the four-day Boao forum in Hainan, stressed global corporation among nations in artificial intelligence, biotechnology, and new energy. Meanwhile, both the S&P200 and Nikkei slipped 0.5% and 0.9% respectively. The Australia – New Zealand travel bubble is poised to benefit a decimated tourism industry tremendously though could hit a snag with vaccine delays. In high stakes talk, Australia intends to ask the EU to lift export restrictions on 3m doses of AstraZeneca’s vaccines in exchange for dropping carbon tariffs on imports.
Crude oil edged higher to $63.40 as investors resume speculating the reopening of the economy stoking demand despite OPEC’s planned production increase. India brutal COVID-19 resurgence though poses potential risk to oil demand.
The U.S. dollar weakened against a basket of majors, more so sharply against the pound and yen. Down 1% for the former and 0.5% for the latter. Gold retraced to $1,771 and bitcoin resumes its freefall, hitting a low of $53,500 intraday.