Stock market financial market screen frame on the street
- The Asian and European markets widened gains on Tuesday, after another record on Wall Street.
- The dollar fell 110 yen for the first time since March last year, with optimism about the global economic outlook causing investors to abandon the safe-haven Japanese unit.
- US inflation has remained stable for the time being, with data from last week reaching below expectations.
The Asian and European markets widened gains on Tuesday after another Wall Street record, while the dollar hit its biggest one-year high above 110 yen, fueled by growing optimism about the global economic recovery.
However, investors remain divided between the vaccine-fueled optimism about the economic outlook and fears about an increase in inflation that the recovery should bring with it.
With a series of big data announcements coming this week, analysts said traders are waiting for the next catalyst to boost purchases, although most suggest that the long-term rebound in stocks is expected to continue this year despite fluctuations. recent news.
The main call is the US government’s employment report, which will give the latest picture of the world economy as it slowly emerges from the crisis, while private jobs and unemployment claims are also due, along with readings on manufacturing activity.
“With a lot of increasing optimism in price, economic data will need to do a lot of heavy lifting in the future,” said Stephen Innes of Axi.
“And, as we all know, nothing is a sure bet in the markets, especially when it comes to betting on high expectations of economic data.”
Also in focus is Joe Biden’s long-awaited infrastructure bill, which is expected to be worth $ 3 trillion – some reports suggest $ 4 trillion – and which follows his vast stimulus package.
The expected wave of spending by the US government comes when the president promises that 90% of American adults will be eligible for vaccination by April 19. In the meantime, his goal of getting 200 million people hit in the first 100 days also seems to be on track.
Innes added that, with the Federal Reserve promising to keep ultra-loose monetary policy – and interest rates at record lows – for as long as necessary, markets could face another major advance.
Still, the threat that the economic reopening will see a big jump in spending continues to weigh on market sentiment, as traders fear it will force the Fed to tighten its belt before 2024, as signaled.
US inflation has remained stable for the time being, with data from last week reaching below expectations.
But market analyst Louis Navellier said: “China is starting to raise the price of some of its products, so we have inflation out there. And it will be very, very interesting, because the costs of commodities like copper and everything are going up too. “
However, Esty Dwek of Natixis Investment Managers remained confident.
“The smooth vaccination going on in the U.S. and broad fiscal support are raising growth prospects and, with that, inflation expectations,” she said.
The rise in earnings “has not led to stock outflows. The fundamental support for risky assets already exists.”
Tokyo, Hong Kong, Shanghai, Seoul, Singapore, Taipei, Mumbai and Wellington went up, although Sydney, Manila and Jakarta fell.
London, Paris and Frankfurt got up in the morning.
The dollar broke 110 yen for the first time since March last year, with optimism about the global economic outlook and rising US bond yields, prompting investors to abandon the Japanese safe-haven unit.
“The dollar-yen trend is supported by the increase in Treasury yields as the market focuses on the extent of the potential economic recovery in the US,” said Masahiro Ichikawa of Sumitomo Mitsui DS Asset Management.
“The dollar could rise to 115 yen by the end of the year, depending on the pace of recovery.”
Observers were watching the consequences of the billions of dollars worth of shares being sold by the troubled American Archego fund, which left several creditor banks exposed to huge losses, including Japan’s Nomura and Switzerland’s Credit Suisse.
Nomura fell slightly in Tokyo, the day after plummeting 16%.
Oil rose with investors awaiting Thursday’s meeting of OPEC and other major producers to discuss production, with market observers suggesting that they should maintain the status quo after recent price volatility and demand concerns, particularly from Europe.
Oil increased on Monday after initially falling with the news that traffic was resumed on the Suez Canal after a huge container ship blocking the waterway was freed.