Uncertainty about the future course of the monetary policy remains palpable on the stock markets, and investors are caught between hopes of a strong economic recovery and concerns about inflation rising too sharply, which in turn could force the Fed and also the European Central Bank (ECB) to adjust their interest rate policies. On Wall Street, the indices closed only slightly changed on Wednesday and were again unable to save the initial momentum over the finish line. The Dow Jones Industrial ended trading at 34'600.38 points (+0.07%) and the S&P 500 gained +0.14% to 4'208.12 points. Indices also trended sideways on the technology exchange: the Nasdaq 100 closed at 13'675.79 points (+0.16%) and the Nasdaq Composite at 13'756.33 points (+0.14%). Meanwhile, the yield of ten-year US government bonds traded at around 1.6%. The focus is now the US labor market report expected on Friday.
In Asia, mostly slight gains could be observed on the stock markets. In Tokyo, the Nikkei 225 is up +0.4% and the broader Topix gains +0.8%. In Hong Kong, however, the Hang Seng index loses -0.4%, while on the Chinese mainland, the CSI 300 gains around +0.3% and the Shanghai Composite advances by +0.4%.
The US economy continues to recover, benefiting from the broad easing of pandemic measures thanks to the rapidly advanced Covid-19 vaccination campaign, which is reflected in increased consumption. According to the economic report published yesterday evening, the so-called Beige Book, the economic recovery in the US is progressing at a “moderate pace.” However, the situation on the labor market remains tense and price pressures have increased noticeably - especially in prices for construction materials and industrial raw materials. There are now more and more voices at the top of the central bank that at least want to consider reducing bond purchases. However, an immediate turnaround in rates should not be expected at present, and the Fed is likely to be keen to signal a change of policy to the financial markets at an early stage.
At the producer level, prices rose by +7.6% in April on an annual basis (consensus +7.4%) and by +1.0% month-on-month. Here, too, prices were driven particularly by higher energy prices, which rose by +20.4% on an annual basis. As a rule, companies pass on higher purchasing costs to customers, which means that producer prices tend to set the direction of consumer prices.
The President of the European Central Bank (ECB), Christine Lagarde, is convinced that the euro has successfully defended its role as one of the world's most important currencies even during the corona crisis and is the second most used currency globally after the US dollar. In 2020, the euro's share of global foreign reserves was virtually unchanged at 21.2% (-0.7%), according to the ECB. The greenback comes to a share of just under 60%. Lagarde stressed that the euro – in contrast to the period of the euro debt crisis in 2009 – now has a largely stable international role.
|09:15||SP||IHS Markit PMI Services (May)||54.6|
|09:45||IT||IHS Markit PMI Composite (May)||51.2|
|09:50||FR||IHS Markit PMI Composite (May)||57.0|
|09:55||GE||IHS Markit PMI Composite (May)||56.2|
|10:00||EZ||IHS Markit PMI Composite (May)||56.9|
|10:30||UK||IHS Markit PMI Composite (May)||62.0|
|14:15||US||ADP Employment Private Sector (May)||+742,000|
|14:30||US||Initial Jobless Claims (weekly)||406,000|
|14:30||US||Non-Farm Productivity Q1||+5.4%|
|15:45||US||IHS Markit PMI Composite (May)||68.1|
|16:00||US||ISM PMI Non-Manufacturing (May)||62.7|
|US||Apple Developer Conference WWDC|
|US||Pharma Conference ASCO|
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Source: LGT Bank (Switzerland) Ltd.
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