Berita 24 English - Stocks struggled to gain traction on Monday as investors awaited key US inflation readings for guidance on monetary pol...
Berita 24 English - Stocks struggled to gain traction on Monday as investors awaited key US inflation readings for guidance on monetary policy, while bitcoin recovered from its recent sell-off following news of China's crackdown on cryptocurrency mining and trading.
European stocks gained 0.1 per cent following Friday's data showing accelerating business growth in the United Kingdom and the eurozone in April. The same day, ECB President Christine Lagarde stated that it was still too early to discuss winding down the bank's 1.85 trillion euro stimulus program.
Austria, Denmark, Hungary, Norway, Switzerland, and Germany all had their markets closed for the holiday.
"As their economies reopen, the eurozone and the United Kingdom are beginning to bloom," Bank of Singapore chief economist Mansoor Mohi-uddin wrote in a note.
"Declining hospitalizations, decreasing fatalities, accelerating vaccinations, and easing lockdowns are all contributing to a rapid recovery of confidence across Europe."
The MSCI world equity index increased by 0.1 per cent.
MSCI's broadest index of Asia-Pacific shares, not excluding Japan, fell 0.2 per cent in light trade. The Nikkei in Japan gained 0.2 per cent, while Chinese blue chips gained 0.4 per cent.
Nasdaq futures increased by 0.4%, while S&P 500 futures increased by 0.5%.
Belarusian sovereign dollar bonds fell as much as two cents on Monday after authorities forced an airliner to land and arrested an opposition-minded journalist on board, drawing condemnation from Europe and the United States.
Following Friday's surveys of global services sectors, all eyes will be on personal consumption and inflation figures in the United States this week.
A high core inflation reading would raise alarm bells and rekindle talk of the US Federal Reserve beginning its tapering sooner than expected.
This week's calendar features a slew of Fed speakers, including influential Fed Board Governor Lael Brainard, and markets will be watching to see if they stick to the script on policy patience.
According to BofA's monthly Fund Manager survey, a record 69 per cent of respondents anticipate global economic growth and inflation to be above trend.
As a result, managers pushed into commodities and late-cyclical, were overweight positions reached near 15-year highs, while Bitcoin remained the most crowded trade.
"With such bullish views on growth and inflation, investors face the risk that growth will slow and inflation will prove temporary," BofA analysts wrote in a note.
"Also, technology, which was viewed as crowded not long ago, has returned to an underweight position and would likely benefit if inflation fears abated."
IN FAVOR OF GOLD
After losing 13% on Sunday, bitcoin was up 6% on Monday to $36,735 but remains more than 40% below its all-time high.
It was harmed partly by China's crackdown on cryptocurrency mining and trading as part of ongoing efforts to prevent speculative and financial risks.
In comparison, the major currencies remained subdued, with the euro remaining at $1.2197 after repeatedly failing to break through chart resistance near $1.2244 last week.
The dollar was stuck at 108.74 against the yen, trapped between support at 108.56 and resistance near 109.33. The dollar had stabilized at 89.920 against a basket of currencies, falling to its lowest level since January of 89.646 on Friday.
In bond markets, Lagarde's dovish remarks on Friday helped keep borrowing costs below multi-month highs.
Germany's benchmark 10-year bond yield was slightly lower at -0.13 per cent, roughly six basis points lower than the two-year highs reached last week.
The dollar's weakness, combined with inflation fears and the wild volatility of cryptocurrencies, has reintroduced gold into favour. The metal was last trading at $1,881 an ounce, having reached a record high in January.
"The recent combination of a strong US CPI, weak employment, and Fed policymakers willing to allow inflation to overshoot while addressing the employment gap may keep gold bullish for a while longer," said Michael Hsueh, Deutsche Bank's commodities and foreign exchange strategist.
"Gold's recovery has been accompanied by a strong rally in certain sectors of the commodities complex, which has been increasingly represented this year by agriculture, metals, and transportation indices, as well as an eight-year high in 10-year US inflation expectations."
Oil prices increased marginally as a storm formed in the Gulf of Mexico. Iran announced the expiration of a three-month nuclear monitoring deal, casting doubt on the future of indirect talks to lift US sanctions on Iranian crude exports. [R/O]
Brent crude was up 1.5 per cent to $67.46 per barrel at the time of writing, while US crude was up 1.5 per cent to $64.54 per barrel.
