Stocks Climb in Volatile Trading on GDP, Earnings

US stocks rose to a record as investors digested the latest batch of corporate earnings and data that showed the American economy gained steam in the first three months of the year. The S&P 500 rose by 0.68% to 4,211.47 while Dow Jones was up 239.98 points (0.71%) to 34,060.36.

US Recovery Gains Steam as Spending Fuels 6.4% GDP Growth

US economic growth accelerated in the first quarter as a rush of consumer spending helped bring total output to the cusp of its pre-pandemic level, foreshadowing further impressive gains in coming months. Gross domestic product expanded at a 6.4% annualized rate following a softer 4.3% pace in the fourth quarter. Personal consumption, the biggest part of the economy, surged an annualized 10.7%.

US Jobless Claims Fell Last Week to Fresh Pandemic-era Low

Applications for US state unemployment insurance fell last week to a fresh pandemic low as more Americans get vaccinated and return to work. Initial claims in regular state programs decreased by 13,000 to 553,000 in the week ended April 24. Prior week’s total was revised up to 566,000. The drop in unemployment benefits applications is the latest sign the job market is steadily returning to its pre-pandemic strength.

ECB’s Lane Warns Full Euro-area Recovery Is Still Some Way Off

European Central Bank chief economist Philip Lane warned that the euro-area economy will need time to achieve a full recovery despite finally reaching a turning point in the crisis. The pick-up in the region’s vaccination campaign is paving the way for a lifting of coronavirus restrictions in the coming months and should allow for a “good recovery”.

German Inflation Breaks Through 2% for First Time Since 2019

Germany’s inflation rate rose above 2% for the first time in two years, boosted mainly by energy costs. Consumer prices also increased sharply in Spain by 1.9% from a year earlierand are expected to pick up in France and Italy. A euro-area report due on Friday is set to show the rate reaching 1.5%, the highest since 2019. European Central Bank predicts any pickup will be temporary.

German Joblessness Unexpectedly Rises Amid Stricter Virus Curbs

German unemployment unexpectedly rose in April, signaling that the labor market is experiencing strains from lockdown restrictions that have been tightened. An increase of 9,000 put the total number of jobless people at 2.76 million and kept the rate at 6%. The report suggests that businesses in Europe’s largest economy are facing pressure after nearly six months of lockdowns, despite generous subsidies by the government.

UK Online Job Advertisements Rise Above Pre-pandemic Levels

Online job advertisements in the UK climbed above their pre-pandemic level last week for the first time in more than a year as companies prepared for the easing of lockdown restrictions. The amount of posts climbed to 103% of the February 2020 average, up 4 percentage points on the previous week and above 100% for the first time since early March 2020.

Oil Climbs Above US$65 as Car-fuelled Demand Sparks Recovery

Oil surpassed US$65 a barrel, the highest since mid-March, as signs of strengthening demand from the US to China stoked optimism that key markets are turning a corner in their recovery from the pandemic. Brent crude for June settlement rose US$1.29 to US$68.56 per barrel.

Source: Affin Hwang Research - 30 Apr 2021