Home News Europe and US stocks mostly higher

Europe and US stocks mostly higher

Published on May 03, 2021

European and US stock markets mostly rose Monday but fell in Asia as investors there weighed the risk of inflation with the global economy recovering from the coronavirus pandemic.

With London, Tokyo and Shanghai closed for holiday, traders diverged ahead of more company results and US jobs figures later this week.

Investment giant Warren Buffett instilled some unease after saying at the weekend that he expected the US economy was in “super high gear” thanks to massive Federal Reserve and government support but that it would fan inflation.

He said “people have money in their pocket and they’re paying higher prices” and there was more inflation than expected six months ago.

His comments revived concerns that the explosive recovery, vaccinations and easing of lockdowns would push up prices to the extent that the Fed would have to ease up on its market-supportive, ultra-loose monetary policies.

Those worries continue to hover over trading floors despite Fed boss Jerome Powell’s repeated insistence that it will not tighten policy until it is happy that unemployment has been tamed and inflation is running consistently hot for some time.

However, Dallas Fed president Robert Kaplan broke ranks with Powell on Friday as he said tapering could soon be considered.

“We’re now at a point where I’m observing excesses and imbalances in financial markets,” he said.

“I’m very attentive to that, and that’s why I do think at the earliest opportunity I think it will be appropriate for us to start talking about adjusting those purchases.”

Inflation concerns did not dampen sentiment on Wall Street, which largely pushed higher.

“Optimism of economic reopening is buoying sentiment, with travel and leisure stocks seeing some interest, while some upbeat manufacturing data from overseas is aiding sentiment,” said analysts at Charles Schwab brokerage.

US manufacturing data released later showed that factories struggled to obtain supplies in April, but companies were increasingly optimistic about the future.

The Dow and S&P 500 were both higher in late morning trading, while the tech-heavy Nasdaq moved lower.

Paris and Frankfurt both ended the day higher.

But Hong Kong and Singapore were down more than one percent, while Taipei shed two percent. There were also losses in Seoul, Mumbai, and Jakarta though Wellington was up. Sydney and Manila were flat.

The losses came despite data showing better-than-forecast jumps in factory activity in Australia, Indonesia, Malaysia and Taiwan.

“Traders believe that it is highly likely that the global stock market, especially the US stock, could face some correction as we have seen three consecutive months of gains,” said Naeem Aslam, chief market analyst at AvaTrade.

Investors are also concerned about the rising number of Covid cases in India and how it could affect the global economy, Aslam said.

Traders will be keenly watching the release of US jobs data this week, which will provide the latest snapshot of the world’s top economy and its recovery.

The jobs figure “is what matters the most this week, and investors will be looking at this data through the Fed’s lens,” Aslam said.

Oil prices rose, recovering some of the ground from the roughly two-percent drops they suffered on Friday on concerns that the frightening coronavirus surge in India will hit demand in the huge economy.

– Key figures around 1530 GMT –

New York – Dow: UP 0.5 percent at 34,178.51 points

EURO STOXX 50: UP 0.5 percent at 3,996.18

London – FTSE 100: closed for a holiday

Frankfurt – DAX 30: UP 0.7 percent at 15,236.47 (close)

Paris – CAC 40: UP 0.6 percent at 6,307.90 (close)

Hong Kong – Hang Seng Index: DOWN 1.3 percent at 28,357.54 (close)

Tokyo – Nikkei 225: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Euro/dollar: UP at $1.2066 from $1.2021 at 2100 GMT

Pound/dollar: UP at $1.3917 from $1.3814

Euro/pound: DOWN at 86.71 pence from 87.02 pence

Dollar/yen: DOWN at 109.02 yen from 109.33 yen

Brent North Sea crude: UP 1.3 percent at $67.62 per barrel

West Texas Intermediate: UP 1.4 percent at $64.49 per barrel

— Bloomberg News contributed to this story —

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