On Wall Street, the mood stabilized yesterday after the wave of selling in technology stocks the previous day. On the Nasdaq technology exchange, the indices closed again in the red but relatively moderate: the Nasdaq Composite ended Wednesday's trading -0.37% lower at 13'582.43 points. The market-wide S&P 500 remained almost unchanged from the previous day at 4'167.59 points (+0.07%), while the Dow Jones Industrial gained +0.29% to 34'230.34 and traded not far from recent record highs. The announcement of the US government to support a suspension of intellectual property rights for corona vaccines caused a short-term sell-off in pharmaceutical stocks.
In Asia, there was no consistent trend after holidays in Japan, South Korea, and China. In Tokyo, however, the Nikkei 225 index rose strongly by around +1.6%. For the European stock markets, the futures signal a slightly positive start to trading. In the center today is also the interest rate decision of the Bank of England at 13:00.
The US Treasury Secretary Janet Yellen felt compelled to qualify her statements regarding the inflation trend in the US and consequently rising interest rates. Yellen told the Wall Street Journal that she had not intended to make an interest rate forecast or recommendation. Earlier, the Treasury secretary had said in an interview that to prevent the US economy from overheating, interest rates could rise “modestly.” In the financial markets, Yellen's statement initially caused a stir and fueled speculation about an imminent change of course by the Fed considering rising inflation expectations. The former head of the Federal Reserve also made it clear that interest rate decisions are the sole responsibility of the Federal Reserve and not the Treasury Department.
In the US private sector, job growth increased strongly in April, according to the monthly survey of the labor market service provider ADP (Automatic Data Processing). At 742'000 new jobs created, the increase fell short of the consensus estimate of 800'000 jobs, but it was the strongest job growth since September 2020, with a total of about 1.3 million new jobs created over the past two months.
In the service sector in the US, sentiment improved further in April and business activity accelerated. This was indicated by the IHS Markit Purchasing Managers' Index, which rose sharply from 60.4 points in March to 64.7. Analysts had expected 63.3. For the US private sector, the PMI of the London-based market research institute also signaled a significant strengthening of the growth trend. The composite indicator (PMI Composite) climbed to 63.5 in April from 59.7 points a month earlier. According to IHS Markit Chief Economist Chris Williamson, the Fed's continued accommodative monetary policy, massive stimulus packages, a brightening labor market and the successful vaccination campaign are all contributing to an improved business climate.
Sentiment among service and industrial companies in the eurozone surveyed by IHS Markit was more confident about further business developments in April. The Purchasing Managers' Index (PMI Composite) for the private sector improved from 53.2 to 53.8 points. As is generally known, the indicator signals a growth trend above 50 points. According to IHS Markit chief economist Chris Williamson, sentiment has brightened both in industry and among service providers, although this varies greatly from region to region.
In the euro countries, prices at company level rose sharply in March. On an annual basis, producer prices increased by +4.3%, the highest rate of increase observed since the end of 2018. In the previous month, producer price inflation had been +1.5%. In addition to supply chain issues, energy prices were primarily responsible for the price increase. Energy prices were up in March by around +10% year-on-year because of the collapse in oil prices in the first pandemic wave in the spring of 2020. However, intermediate goods, which had increased in price by +4.4% on average, also drove up prices. The rise in producer prices is likely to be reflected in consumer prices with a time lag.
|08:00||GE||Industry Orders (March, y/y)||+1.2%|
|10:00||EZ||ECB Monthly Bulletin|
|10:30||UK||IHS Markit PMI Composite (April)||60.0|
|11:00||EZ||Retail Sales (March, y/y)||-2.9%|
|13:00||UK||Bank of England Monetary Policy Decision||+0.1%|
|14:30||US||Initial Jobless Claims (weekly)||553,000|
|14:30||US||Productivity ex-Agrar Q1 (q/q)||-4.2%|
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Source: LGT Bank (Switzerland) Ltd.
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