Tech Selloff Sweeps Across Stocks; Dollar Climbs

Volatility gripped financial markets as a rout in some of the largest tech companies dragged down stocks. The dollar rose. Oil futures rallied, while yields on benchmark Treasury notes rose past 1.2%. The S&P 500 dropped by 0.67% to 4,164.66 while Dow Jones was up 19.80 points (0.06%) to 34,133.03.

US Trade Gap Widened to Fresh Record of US$74.4 Billion in March

US trade deficit widened to a new record in March as value of imports surged to a fresh high. The gap in trade of goods and services expanded to US$74.4 billion in March from a revised US$70.5 billion in February. Imports rose 6.3% to a record US$274.5 billion, while exports climbed 6.6% to US$200 billion. Demand from American consumers stuck at home during Covid-19 has been sending US imports to highs.

Yellen Clarifies Inflation Remark, Sees No Need for Fed to Hike

Treasury Secretary Janet Yellen said she wasn’t forecasting interest-rate increases to rein in any inflation spurred by President Joe Biden’s proposed spending. “It’s not something I’m predicting or recommending,” she noted. “If anyone appreciates the independence of Fed, I think that person is me.” Yellen said she didn’t anticipate a bout of persistently higher inflation.

Italy Minister Says Recovery Plan Hinges on Private Sector Boost

Italy’s plan to kick-start its economy using grants and loans from EU’s recovery fund won’t be successful without significant buy-in from private investors, Infrastructure and Mobility Minister Giovannini warned. He noted that everyone is talking just about public funds, but that’s a distorted view. Giovannini is setting up a commission within his ministry to explore ways to use other financial instruments for investment.

Johnson Predicts Lockdown Ending June 21 as He Seeks Votes

British Prime Minister Boris Johnson said coronavirus lockdown rules are set to be scrapped in seven weeks’ time, as he hailed the UK’s successful vaccine rollout ahead of key elections this week. On the campaign trail, Johnson said the pandemic data was likely to allow people in England to stay overnight with friends or relations, with indoor hospitality able to reopen from May 17.

New Zealand Jobless Rate Unexpectedly Fell in First Quarter

New Zealand’s unemployment rate unexpectedly fell in the first quarter as the economy’s recovery boosted business confidence and hiring. The jobless rate fell to 4.7% from 4.9% in the fourth quarter. Employment rose 0.6% from the previous three months. New Zealand business confidence rebounded in late 2020 after a V-shaped economic recovery, encouraging firms to hire more workers.

Australia Central Bank Lifts Outlook, to Review YCC in July

RBA upgraded its economic outlook and said policy makers will review its bond programs in July, while maintaining interest rates will remain at emergency levels until at least 2024. RBA’s Governor Philip Lowe kept the cash rate and three-year yield target at 0.10%. He said the board will decide at its July 6 meeting on a third tranche of quantitative easing and whether to shift yield curve control to target the November 2024 maturity from the current April 2024 bond.

Oil Reaches Seven-week High With Demand Revival Gaining Traction

Oil climbed to the highest since the middle of March as reopening efforts and vaccination pushes from the US to Europe underpin hopes for a return to normal demand in the world’s largest economies. Brent crude for July settlement rose US$1.32 to US$68.88 per barrel.

Source: Affin Hwang Research - 5 May 2021