Market Watch Late May 2021 – Futures Stable due to FRS, Positive swing, Stoxx Europe 600, Bitcoin tries to playback…
US equity futures are showing a positive trend. Concerns about rising inflation remain the focus of investors as the recovering economy brings rising price pressures and fears that the Central Bank (Fed) may begin to reduce its monetary stimulus. Meanwhile, Fed officials continue to say they expect any rise in inflation to be temporary. The U.S. dollar is low 4-1 / 2 month against a basket of peers, and the Fed’s statement on continuing policy silenced worries over possible inflation and forced a rate hike.
Stoxx Europe 600
Equities in Europe trade on the up, with the Stoxx Europe 600 hitting a record high. Western European stock indices rise as sentiment in global markets improves thanks to easing inflation fears. Shares of Deutsche Wohnen SE rose among Stoxx Europe 600 components, jumping 15.2 percent on news that Vonovia SE agreed to acquire a rival for $23 billion. Vonovia was among the decliners, down 6.8%.
Federal reserve news
FRS officials confirmed they expect price pressures to be temporary rather than sustained as the US economy recovers. China’s CSI 300 index was up almost 4% after Beijing sought to cut the cost of commodities. All this led to a rise in emerging market equities.
Fed Reserve officials James Bullard, Rafael Bostic, and Lael Brainard claimed in speeches yesterday that they expect prices to rise in the coming months due to shortages and supply constraints as the pandemic recedes, and pent-up consumer demand returns. Most price increases should prove temporary.
Investors await information from the core PCE index. This favorite inflation indicator of the Federal Reserve is about to be published on Friday, and it could influence market expectations regarding the monetary policy. And they are watching the situation in Asia due to the Covid-19 spikes.
Nema Ramkhelawan-Bhana from Rand Merchant Bank admits that Monday’s sluggishness was over due to massive comments by Fed members downplaying the case for early tightening. A sign of inflation is enough to excite investors, while a strong economic indicator is enough to boost nominal yields. So, you have to make the most of a favorable situation while it lasts.
Not long ago, Elon Musk refused to accept Bitcoins because cryptocurrencies in their current form pose a threat to the environment. The Chinese government imposed restrictions on cryptocurrency trading. All of this combined to send Bitcoin’s price below $34,000 during trading on Wednesday.
Bitcoin tries to playback
Recently, Bitcoin managed to reduce its swings, but the most trusted cryptocurrency is still around $25,000 below its record high from mid-April.
Investors fell short of their expectations chasing a recovery in oil demand if the Iran nuclear deal is renewed. There is no deal and no oil from that country; so, oil prices fell after the biggest two-day rise since March.
Investment Officer Ray Dalio is also adding bitcoin to his holdings. He made the statement that he favors cryptocurrency over bonds during a Monday panel at the Consensus 2021 conference.
Events this week:
- New Zealand’s monetary policy decision is expected on Wednesday and the Bank of Korea’s interest rate response on Thursday.
- Executives from major US banks to testify before lawmakers on Wednesday.
- GDP, durable goods, and expected home sales on Thursday.
Key movements in the markets
S&P 500 futures rose 0.3%
Futures of Nasdaq 100 are up 0.5%
Dow Jones Industrial Average futures are increased 0.3%
Stoxx Europe 600 Index rose 0.4%
MSCI World Index is up 0.3%
Index of BBDXY Quote falls by 0.1%
The euro is up 0.3% at $1.2254
The UK pound is little changed at $1.4164
Japanese yen falls 0.1% to $108.90
The return on the 10-year Treasury note fell one basis point to 1.59%
The rate of return on 10-year German bonds fell two basis points to -0.16%
The income return on 10-year UK bonds is down to 0.80%
Crude oil from West Texas falls 0.6 percent to $66 per barrel
Gold futures are down 0.1 percent to $1,885 an ounce