Market Commentary - May 4, 2021
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.
Figure 1 (Source: IS Prime) ES35 Daily : Of the last 10 days, Spain's benchmark records 8 up days as the nation plays catch up where counter-parts have already recovered back to pre-pandemic levels.
- As expected, the RBA kept rates unchanged citing “economic recovery in Australia has been stronger than expected” whilst the global recovery remains uneven with instances that some countries have yet to contain the virus.
- ISM manufacturing data out of the U.S. declined to 60.7 whilst expectations saw an increase to 65. Nonetheless figures remain in expansionary territory with the disappointment largely a result of constrained input shortages.
- ISM manufacturing data out of the E.U. held steady at elevated levels largely a result of pent-up demand from lockdown.
Headliner to Watch
- First face to face G7 meeting since the pandemic will be held in London among foreign ministers.
- The RBNZ will release their financial stability report as many await to digest the centrals view on New Zealand’s economic prospect.
- New Zealand expected to release continuing quarterly job growth at 0.3% whilst the unemployment rate remains at 4.9%.
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Topics: Market Commentary