Saturday, 8 May 2021

US jobs disappoint, stocks hit record highs

Markets rose on Friday.

The S&P 500 rose 0.7 percent to a record high, the STOXX Europe 600 rose 0.9 percent to a record high and the Nikkei 225 rose 0.1 percent.

US stocks shrugged off a disappointing April employment report, which showed 266,000 jobs created last month.

“It was a disappointing read on job creation and brings into question the assumption that Q2 is going to carry-forward the positive momentum established at the beginning of the year,” Ian Lyngen, head of US rates at BMO, said in a note.

Still, Richard Flynn, UK managing director at Charles Schwab, said that “across economic metrics -- from GDP to retail sales to job growth -- boom conditions are evident”.

Also, JJ Kinahan, chief market strategist at TD Ameritrade, said: “It certainly takes the pressure off the Fed and takes an imminent rate increase off the table.”

Friday, 7 May 2021

Markets mixed, “vulnerable to significant declines”

Markets were mixed on Thursday.

The S&P 500 rose 0.8 percent and the Nikkei 225 surged 1.8 percent. However, the STOXX Europe 600 fell 0.1 percent.

US stocks rose after a better-than-expected reading on jobless claims. First-time claims for unemployment insurance totalled 498,000 for the week ended 1 May, a pandemic-era low.

“Today’s read is another proof point that we’re one step closer to full economic recovery, sooner than some may have expected,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.

“Given that we expect the economy to grow well above trend this year and next, value stands to benefit,” said Keith Lerner, chief market strategist at Truist.

However, a Federal Reserve report released on Thursday warned that rising asset prices in the stock market and elsewhere pose increasing threats to the financial system.

The report said that “valuations for some assets are elevated relative to historical norms even when using measures that account for Treasury yields” and thus “asset prices may be vulnerable to significant declines should risk appetite fall”.

In an accompanying statement, Fed Governor Lael Brainard said: “The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects of a re-pricing event.”

Thursday, 6 May 2021

Markets rise, US consumers neutral on stocks

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.1 percent and the STOXX Europe 600 surged 1.8 percent.

Economic data on Wednesday were mostly positive.

In the US, private payrolls rose by 742,000 jobs in April according to ADP, the IHS Markit US services PMI came in at 64.7 for April while the ISM non-manufacturing index came in at 62.7.

In the euro area, the IHS Markit final composite PMI for April came in at 53.8, up from 53.2 in March.

Despite the rally in stocks and the recovery in the economy, US consumers are still skeptical about stocks.

According to a survey by the Conference Board, expectations for a decrease in stock prices over the next 12 months has fallen to a neutral level after being elevated amid the COVID-19 pandemic, far away from reaching excessive levels that would trigger a contrarian sell signal.

Wednesday, 5 May 2021

Tech stocks lead market falls

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.7 percent and the STOXX Europe 600 fell 1.4 percent.

Technology stocks saw the biggest losses, with the Nasdaq Composite plunging 1.9 percent.

“It’s a combination of a sell-off on the winners of the past months... with the month of May and a ‘nervous’ positioning,” said Angelo Meda, portfolio manager at Banor SIM in Milan.

Adding to concerns for investors were comments by US Treasury Secretary Janet Yellen that interest rates may rise.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said during an economic forum presented by The Atlantic.

Tuesday, 4 May 2021

Markets rise amid positive manufacturing data

Markets were mostly higher on Monday.

The S&P 500 rose 0.3 percent and the STOXX Europe 600 rose 0.6 percent.

Economic data on Monday were positive, with Markit's manufacturing PMI rising in April in both the US and the euro area to 60.5 and 62.9 respectively, the latter a record high.

However, the Institute for Supply Management's US manufacturing PMI for April came in at 60.7, down from 64.7 in March.

US stocks were also boosted by news that most capacity restrictions will be lifted across New York, New Jersey and Connecticut this month.

In Europe, analysts at BCA Research noted that COVID-19 infections are stabilising in many countries and vaccinations are gathering pace. “This will allow authorities to ease restrictions and economic activity to accelerate,” they wrote.

Monday, 3 May 2021

India COVID-19: Industry body urges "maximal response measure"

COVID-19 is continuing to take a heavy toll in India.

On Monday, the country reported 368,147 new cases, the twelfth consecutive day infections has exceeded 300,000, and 3,417 deaths from the disease.

"In my opinion, only a national stay at home order and declaring medical emergency will help to address the current healthcare needs," said Bhramar Mukherjee, an epidemiologist with the University of Michigan.

The situation in India has become so dire that even the country's industry, often the opponents of restrictions in other countries, has urged curbs to economic activity to save lives.

Uday Kotak, managing director of Kotak Mahindra Bank and president of the Confederation of Indian Industry, said a "maximal response measure at the highest level is called for to cut the transmission links", including "curtailing economic activity to reduce suffering".