Stocks Pare Biggest Monthly Rally Since November

Stocks dropped from a record as traders assessed corporate earnings, economic data showing potential inflation pressures and hawkish remarks from a Federal Reserve official. The dollar climbed. The S&P 500 dropped by 0.72% to 4,181.17 while Dow Jones was down 185.51 points (0.54%) to 33,874.85.

Yellen Says Doesn’t See Biden Plan Stoking US Inflation

President Joe Biden’s economic plan is unlikely to create inflation pressure in the US because the boost to demand will be spread over a decade, said Treasury Secretary Janet Yellen. She doesn’t believe that inflation will be an issue. But if it becomes an issue, they have tools to address it. She also noted that it’s spread out quite evenly over eight to 10 years. So, the boost to demand is moderate.

US Consumer Sentiment Climbs in April to Fresh Pandemic High

US consumer sentiment continued to strengthen in late April, adding to signs that household spending will remain strong in the coming months. The University of Michigan’s final sentiment index improved to 88.3 from a preliminary reading of 86.5 and a March figure of 84.9. Consumer confidence is strengthening as vaccinations quicken and more states and businesses reopen.

Euro-zone Vaccine Delays Mean Double-dip Recession as US Booms

The euro zone tipped into a double-dip recession in the first quarter, highlighting the cost of slow coronavirus vaccinations that have left the economy lagging far behind the US. The feeble economic data show the importance of accelerating inoculations and getting the bloc’s 800 billion-euro joint recovery fund under way as soon as possible. Output in the 19-nation euro area was down 0.6% in the first quarter and declined at nearly three times that pace in Germany.

ECB’s Weidmann Says Government Finances Mustn’t Delay Tightening

ECB policy maker Weidmann said officials must be prepared to tighten monetary policy when needed to curb inflation, even if that increases the strain on heavily indebted governments. Weidman said the institution risks becoming too entangled with fiscal policy through its massive bond purchases, which have been deployed repeatedly to calm markets and to boost inflation, and which were ramped up during the pandemic.

South Korea’s Exports Increase by Most in 10 Years in April

South Korea’s exports last month rose the most in 10 years, boosted by an increase in the number of working days from a year earlier and reflecting a recovery from the effects of the pandemic. Overseas shipments increased 41.1% from a year earlier, South Korea’s trade ministry said. Total semiconductor shipments climbed 30.2%, while automobiles jumped 73.4%.

Philippines Studies US$499 Million Wage Subsidy Plan for Companies

The Philippines is considering a US$499 million wage subsidy plan that could help pandemic-hit companies retain as many as one million workers. Small businesses that have reduced work hours or temporarily closed will be prioritized, Trade Secretary Ramon Lopez said. The plan, which is under review by economic managers, will provide a monthly subsidy of 8,000 pesos for each worker for three months.

Oil Posts April Gain With Focus on Upcoming Demand Revival

Oil rose this month with a slew of positive economic data and signs of a budding fuel consumption revival in key economies offsetting a worsening coronavirus crisis elsewhere. Brent crude for June settlement declined US$1.31 to US$67.25 per barrel.

Source: Affin Hwang Research - 3 May 2021