Global Stock Markets And Futures Firm After US Fed Comments On Inflation

25/05/2021 Asian stock markets and U.S. futures marched ahead on Tuesday after Nasdaq rallied on Wall Street amid soothing Federal Reserve comments on inflation. MSCI index of Asia-Pacific equities was set for a fourth straight advance, with shares higher in Japan, Hong Kong and China. Federal Reserve officials reiterated they expect transitory rather than lasting price pressures from the U.S. economic rebound. Treasury yields were stable following a retreat and the dollar slipped.

The local market traded softer on Monday as a result of the happenings in China, while global markets were mixed, agitated by the potential downside risk to commodities prices. China’s National Development and Reform Commission had summoned on Sunday metals producers to a meeting in Beijing with multiple government departments and promised the government would show zero-tolerance for monopoly behaviour and hoarding. The JSE lost 0.28% to 66,054 points and the Top-40 0.25% at the close2. Precious and industrial metals fell 1.85% and 0.85%, respectively, with resources down 1.05%. Northam Platinum fell the hardest, down 5.03% to R221, alongside African Rainbow Minerals slidding 2.77% to R260.68 and Kumba Iron Ore retreating 1.71% to R632.81. Top-40 futures are indicating a positive start to the opening, IG markets, 360+ points firmer at the time of the writing. Rand up 0.16% to R13.90/$, while the Yield on 10-year govt rand bonds fell 2.60 bps to 9.35%.

Oil held the biggest two-day gain since March as investors tracked a recovery in demand that may enable the market to accommodate any fresh flows from Iran should the nation’s nuclear deal be revived. Brent futures firm 18cents, or 0.28%, to $68.65, while WTI is 0.17% stronger above $66 a barrel. Gold steadied near the highest level in more than four months as investors weighed comments by Federal Reserve officials who tried to soothe concerns about inflation. Spot gold trading flat at $1879.18.

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EU/UK/US
European stock markets resumed their march higher on Monday, adding to the gains made in the second half of last week as inflation concerns appear to recede. Risk assets are moving higher, with almost all major indices in positive territory and oil prices marching upwards as well. The pan-European Stoxx 600 index edged up 0.14%, while the French Cac-40 gained 0.35% to 6,408.49. London’s blue-chip FTSE100 firmed up 0.48% at the end of the day’s trading. Markets in Austria, Denmark, Switzerland and Germany closed for Whit Monday. UK’s Cineworld Group rose 3.2% after animated movie “Peter Rabbit 2: The Runaway” pulled in more people than expected after a months-long COVID-19 lockdown.

In the U.S., Communication Services and Information Technology sectors led gains, both advancing 1.85% and 1.76% respectively. The S&P500 gained 1% at the close. The Dow was up 0.5%, alongside the Nasdaq seeing the session out 1.40% stronger on the day. Markets were buoyed amid repeated guidance from senior central bank figures that the current rise in inflation is temporary. The U.S. national activity index reading of 0.24 against expectations above 1, along with dovish comments from Federal Reserve speakers, helped support the view that policy will remain on hold for some time.

Digital currencies bounced back on Monday following last week’s crypto rout, regaining ground lost during a weekend selloff on news of China’s clamp-down on mining and trading of cryptocurrencies.

ASIA
MSCI’s broadest index of Asia-Pacific ex. Japan was up 1% at a two-week high, after U.S. stocks ended the previous session with mild gains. Australian shares were up 0.66%, while Japan’s Nikkei stock index rose 0.6%. Chinese stocks hit a 2-1/2-month high on financial services, consumer and tourism gains. The blue-chip CSI300 index jumped 2.06%, while the benchmark Shanghai Composite Index advanced 1.60%, reaching their highest levels since early March. Hong Kong’s Hang Seng index rose 1.26%. China’s market regulators warned industrial metal companies to maintain “normal market order” during talks on the sharp price gains.