Stocks Fall as Inflation Unease Lingers; Oil Rises

US stocks fell for the first time in three sessions and the dollar weakened as investors mulled risks to the economic outlook including inflation and a spike in Covid-19 cases in parts of the world. The S&P 500 fell by 0.25% to 4,163.29 while Dow Jones was down 54.34 points (0.16%) to 34,327.79.

Senate Moves Forward With Bill Aimed at Countering China’s Rise

The Senate voted to move ahead with a bill that would jump-start US research and development with a cash infusion of more than US$100 billion as part of a broader push to strengthen American technological competitiveness against a rising China. Senate Majority Leader Chuck Schumer called the legislation a once-in-a-generation investment in American science and American technology.

Fed’s Clarida Says Not Yet Time to Start Taper Talk

Federal Reserve Vice Chair Richard Clarida said the weaker-than-expected US jobs report showed the economy had not yet reached the threshold to warrant scaling back the central bank’s massive bond purchases. “Through that April employment report, we have not made substantial further progress,” Clarida said.

Consumer Sentiment Reaches Record in Canada on Vaccine Progress

Consumer confidence is picking up in Canada as the accelerating rollout of Covid-19 vaccines fuels optimism about the recovery. Almost 45% of Canadians say they think the economy will be stronger in the next six months, according to polling by Nanos Research Group. That’s the highest reading since 2009, lifting the overall confidence index to a record of 64.6.

EU, US Reach Truce on Metal Tariffs Ahead of Biden Visit

The European Union agreed to avoid escalating its dispute with the US over metal tariffs, sparing iconic products such as bourbon whiskey and Harley-Davidson motorbikes from a doubling of EU duties next month. Under the agreement with the Biden administration, the EU will refrain from increasing those tariffs and both sides will engage in a dialog about overcapacity in the steel industry, according to a tweet from EU Commissioner Valdis Dombrovskis.

China’s Recovery Remains Unbalanced as Retail Spending Lags

China’s recovery remained unbalanced in April, with industrial output and investment buoyed by strong exports and a hot property market, while retail sales missed forecasts. Industrial output rose 9.8% in April from a year earlier versus the median estimate for a 10% increase. Retail sales expanded 17.7% in the period, far slower than a projected 25% rise. Fixed-asset investment grew 19.9% in the first four months of the year, in line with forecasts. The unemployment rate was lower at 5.1%.

Weakened Thai Economy Faces Uphill Fight Amid Surge of New Cases

Thailand’s economic contraction continued into the start of year, setting the stage for a further slump as the country now faces its worst wave of Covid-19 cases. Gross domestic product in the first quarter shrank 2.6% from a year earlier, improving from the prior quarter’s 4.2% contraction, the National Economic and Social Development Council said. GDP rose a seasonally adjusted 0.2% quarter-on-quarter

Oil Rises to Two-year High With Investors Eying Demand Comeback

Oil climbed to the highest in two years with optimism building around the comeback of fuel demand in regions such as the U.S., even as Covid-19 flare-ups persist in parts of Asia. Brent crude for July settlement rose US$0.75 to US$69.46 per barrel.

Source: Affin Hwang Research - 18 May 2021