Expectations of Strong Growth Driving Financial Markets

May 5, 2021

The dollar rose by a marginal 0.1% overnight, gaining 0.2% against the Turkish lira and 0.1% versus the Mexican peso and euro, holding steady versu the yen, Swiss franc and yuan, and dipping 02% against the loonie and Australian dollar and by 0.1% vis-a-vis sterling.

Markets remained close one more day in China (Labor Day) and Japan (Children’s Day).

U.S. equity futures suggest a rise at the open. Share prices are up at least 1.0% so far today in Germany, Spain, France, and the U.K., and such closed up 0.9% in India, 0.6% in South Korea and 0.4% in Australia.

Optimism about future growth received data reinforcement today and helped lift 10-year sovereign debt yields by three basis points thus far in the U.K., France and Germany. The U.S. 10-year Treasury yield is two basis points firmer.

Prices for gold and WTI oil have advanced by 1.6% and 1.2%.

Final readings of Euroland’s composite and service sector purchasing managers indices in April were marginally above preliminary results and at 9- and 8-month highs of 53.8 and 50.5. The joint-currency area’s double-dip recession seems over. The composite PMI scores in Spain and France of 55.3 and 51.6 climbed to 25- and 8-month highs. Germany’s 2-month low score of 55.8 nonetheless signals pretty robust expansion. At 51.2, Italy’s composite PMI surpassed the 50 threshold for positive growth in a third consecutive month.

South Africa‘s Standard Bank-compiled private purchasing managers index rose 3.4 points to a 109-month high of 53.7.

Spanish consumer confidence improved to a 15-month high in April.

Swedish industrial production, factory orders, and household consumption in March recorded year-on-year growth of 5.7%, 10.0%, and 5.0%, respectively.

British new car registrations in April totaled 141.6 thousand. In April 2020 when covid restraints were extremely tight, only 4.3k new cars were registered.

New Zealand’s jobless rate last quarter was 0.2 percentage points lower thanĀ  in 4Q 2020. A drop had not been expected. Labor costs were 1.6% greater than a year earlier.

Australian building permits posted a monthly rise in March for the fourth time in five months, this time by 17.4%.

Retail sales in Singapore increased 3.0% on month in March, which lifted the 12-month rate of increase to a 26-month high of 6.2%.

Australia recorded record high composite and service-sector purchasing manager indices in April of 58.9 and 58.6 in April. From a record high of 61.8 in March, the Australian construction PMI settled back to a 2-month low of 59.1, which still conveys fairly rapid expansion.

Sweden’s service sector purchasing managers index jumped 3.7 points to a 14-year peak of 65.6 last month, and the composite PMI (services and manufacturing) was even higher at 66.6.

Thailand’s manufacturing PMI rose almost 2.0 points last month to a 4-month high of 50.7, while Hong Kong’s private PMI settled back 0.2 points but, at 50.3, printed above 50 for a third straight time.

India’s composite PMI declined for a second straight month but remained comfortably above the 50 breakeven level at 55.4. The composite and services PMIs were at 4- and 3-month lows.

Brazilian industrial production fell 2.4% on month but rose 10.5% compared to March 2020.

Highlighting today’s price data, producer price inflation in the euro area jumped 1.1% on month in March and by a 29-month high of 4.3% from the same month a year earlier. The energy component was 2.0% higher than in February and 10.3% above its year-earlier level.

Swiss CPI inflation of 0.3% matched analyst expectations and broke a string of 14 consecutive sub-zero results.

Filipino CPI inflation in April remained at March’s 4.5%.

Officials at the BankĀ  of Thailand unanimously retained a record low 0.5% one-day repo rate and released a statement that express considerable concern about Covid trends in Thailand and warned that future growth would vary greatly depending on the success of Thailand’s vaccine program.

Monetary policies are also being reviewed today in Poland and Brazil.

ADP’s April 742k estimated rise of private U.S. employment growth was a tad smaller than forecast but would constitute a 7-month high nonetheless.

The U.S. non-manufacturing purchasing managers survey will be reported later this morning.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

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