Brazilian Stocks Close Near Records
Brazil’s main stock index has recouped some of its recent losses, with the benchmark Bovespa closing above the 130,200 level, driven by gains in the services and real estate sectors. Economic activity in Brazil rebounded in April, slightly below market expectations, but marking a solid start to the second quarter. At the same time, the Brazilian central bank's weekly "Focus survey" showed growth projections were raised again, with the GDP now expected to expand by 4.85% in 2021 from 4.36% a week earlier. Also, inflation forecasts were lifted to 5.82% from 5.44% in 2021 and to 3.78% from 3.70% in 2022. Cogna Educacao SA and Locaweb Servicos de Internet SA were among the biggest gainers on the index, up 9.5% and 6.2%, respectively.
Platinum Holds Below Six-Year Peak
Platinum futures were trading around $1,150 per troy ounce in June, well below the six-year peak of 1,337 touched on February 16th, as concerns about supply disruptions eased, leading investors to unwind bullish positions and sell futures contracts. As COVID-19 restrictions eased in South Africa, the return of mining operations is due to lead to a rebound in platinum output, which should resolve backlogs of around one million ounces and push the market into a surplus. Still, demand for platinum has been growing amid tighter emissions controls in China and Europe and from green energy plans due to its uses in the production of green hydrogen and hydrogen-run vehicles.
S&P 500, Nasdaq Notch Fresh Records
The S&P 500 and the Nasdaq Composite finished at record closing levels on Monday, as investors rotated out of economically sensitive cyclical stocks into technology names ahead of the Fed's two-day June meeting. While a re-opening economy has unleashed pent-up demand, the supply side of the equation is striving to meet it, resulting in the price pressures seen in recent data. This macro backdrop, in turn, sparked fears that central banks may have to tweak policy soon to prevent economies from overheating. And while the Fed has reassured that any spike in inflation would be transitory, investors will watch for clues about the path of crisis-era stimulus. The blue-chip Dow underperformed its peers, losing nearly 100 points to 34,394, with JPMorgan Chase & Co tumbling almost 2%.
TSX Hovers Near Record High
Canadian shares gave up early gains to end virtually flat on Monday, with benchmark S&P/TSX composite still near record highs as gains in the technology sector offset losses in the heavyweight materials one. The market continues to benefit from the upward momentum seen last week, with investors optimistic over the country’s economic recovery while concerns about rising inflation have taken a back seat. Still, weakness in gold prices pushed shares of precious metal miners deep into the red. Kinaxis Inc and Cascades Inc were the biggest gainers on the TSX, up 6.9% and 6.4%, respectively. Cameco Corp plunged more than 10%, the most on the index.
US500 CFD hits All-time High
US500 CFD increased to an all-time high of 4257
USNDX CFD hits All-time High
USNDX CFD increased to an all-time high of 14119
USNDX Hits All-time High
The tech-heavy Nasdaq outperformed its peers, hitting a fresh intraday record high above the 14,070 level as investors rotated out of economically sensitive cyclical stocks into technology ones. All six major tech names Microsoft, Amazon, Alphabet, Facebook, Tesla, and Apple, were trading in positive territory.
Nickel Regains Ground, Consolidates Above $18,000
LME nickel futures consolidated above the $18,000 per tonne level in June, building impetus to reach its 2021 peak in the coming quarters, fuelled by loose monetary policies and fiscal measures, followed by a robust recovery in economic activity and vaccination picking up pace across the globe. Nornickel, the world’s leading refined nickel producer, has recently projected a 2021 market surplus of 52,000 tonnes, sharply below its prior forecast of 90,000 tonnes. Aside from the rosier economic outlook, the commodity growing usage in lithium-ion batteries and the accelerated roll-out of electric vehicles has played a crucial role in driving prices higher. Still, fears that top consumer China would take action to curb any further rises in prices of industrial metals have been capping some of the upside momentum seen last month.
Brazil Business Confidence Hits Six-Month Peak
The Industrial Entrepreneur Confidence Index in Brazil rose to 61.7 in June of 2021 from 58.5 in the previous month. Business sentiment has risen for the second consecutive month to its highest since December of 2020, as all sub-indices improved, mainly nudged by current domestic economic conditions (+4.6 to 54.8).
Wall Street Lags Behind European Bourses
Wall Street stocks trailed behind European bourses, which hit new records as investors appeared quite reluctant to open fresh positions ahead of the Fed's two-day June meeting. While a re-opening economy has unleashed pent-up demand, the supply side of the equation is striving to meet it, resulting in the price pressures seen in recent data. This macro backdrop, in turn, sparked fears that central banks may have to tweak policy soon to prevent economies from overheating. And while the Fed has reassured that any spike in inflation would be transitory, investors will watch for clues about the path of crisis-era stimulus. The blue-chip Dow lost almost 200 points, and the S&P 500 retreated from its records, weighed down by a sell-off in the financials and materials sectors. The tech-heavy Nasdaq outperformed its peers, lifted by gains in Tesla Inc, Apple Inc and Amazon.com Inc.
USDJPY traded above 110
The USD/JPY pair broke above 110 on Monday, extending its upward momentum to levels not seen since June 6th.
Milan Stocks End Higher
The FTSE MIB managed to close 40 points or 0.2% higher at 25,758 on Monday, near a 3-year high hit last week, after momentarily trading lower in the middle of the session. The key Italian stock index received support from energy stocks as oil prices firmed around $71.5 per barrel. Meanwhile, Atlantia trimmed early gains to finish 0.1% higher, as traders digested news the infrastructure group signed an agreement for the sale of its stake in Autostrade per l’Italia to a consortium led by state lender CDP, ending three years of uncertainty over its subsidiary. In contrast, Ferrari ended 3.3% down after Goldman Sachs analysts downgraded the stock rating to a “sell” and cut its target price to €170 per share.
Gold Remains Under Heavy Selling Pressure
Gold has lost further momentum on Monday, touching a one-month low of $1,845/oz before paring some losses and bottoming around the $1,860 region. The sharp moves came after several central banks once again downplayed the risk of a big and sustained rise in inflation. European Central Bank President Christine Lagarde said monetary and fiscal stimulus should remain until there are clear signs that a "firm, solid and sustainable" economic recovery is underway despite inflation headwinds. The Fed has taken a similar view, with investors digesting the central bank's narrative that a surge in inflation is transitory and because of supply and demand imbalances. Given the above and the fact that the global economic recovery is gathering pace, we could expect further downside in the short term.
Paris Stocks Edge Higher on Monday
The CAC 40 closed 16 points or 0.2% higher at 6,616 on Monday, a level not seen since September 2000, on optimism about an ongoing economic recovery, while concerns about tapering continued to fade. On the economic side, Banque de France said the economy will reach its pre-pandemic level in early 2022, as the vaccination drive allows for the lifting of more restrictions. The central bank also raised its GDP growth forecasts to 5.8% in 2021, from 5.4% in March, and 4.1% in 2022, faster than prior estimates of 3.8%. On the vaccination front, France has inoculated over 30 million people with at least one jab of the COVID-19 vaccines, roughly half of its population. On the corporate side, UBS analysts reaffirmed their “buy” recommendation on Vinci and updated its target price to €105 from a prior €100 per share.
South African Stocks End At Near 2-Week High
The FTSE/JSE All Share Index finished 0.3% higher at 67,942 on Monday, its highest level since June 2nd, tracking its global counterparts, on optimism around a broad recovery and expectations that the US Federal Reserve will repeat its dovish stance later this week. Locally, despite a more optimistic outlook on South Africa’s economy for this year and the future, traders worry that a spike in Covid-19 infections and the Eskom energy crisis could derail any economic recovery. Meanwhile, South African President Cyril Ramaphosa is finally making good on a long-standing pledge to enact policy reforms. On Friday, the government said it would offload a 51% stake in state-owned airline South African Airways, the debts of which had been a burden on the exchequer for several years. Also, a move to reform the energy sector on Thursday allowing private investors to build their own power plants with up to 100 megawatts of generating capacity without requiring a license was cheered by markets.
Spanish Stocks End at Near 16-Month High
The IBEX 35 closed 0.8% higher at 9,281 on Monday, its highest level since February 26th 2020, amid prospects of solid recovery and in anticipation of continuity in dovish monetary policy stance from the US Federal Reserve. On the domestic economic front, the Bank of Spain said it expects the economy to expand between 4.6% and 6.8% this year, with its central scenario pointing to 6.2% growth, up from March's estimate of 6%. Still, the bank does not expect Spain's tourism-dependent economy to reach pre-pandemic levels until the end of 2022, with international travel likely to remain subdued amid concerns over more contagious COVID-19 variants. Elsewhere, the G7 countries ended a three-day summit with a diverse set of initiatives, including a pledge to vaccinate poorer countries against the coronavirus and tackle issues ranging from the post-Covid-19 economic recovery to climate change.
Oil Extends Gains Above $71
Oil prices hit their highest since October of 2018, with WTI crude extending gains above $71 per barrel, supported by an improved demand outlook as an acceleration in COVID-19 vaccinations helped lift travel restrictions in Europe and the US. On the supply side, OPEC+ agreed to keep to their plan to gradually ease supply curbs through July, signalling the ongoing strengthening of market fundamentals. At the same time, US oil rigs in operation rose by six to 365, the highest since April 2020. Investors now continued to follow Iran's nuclear talks in Vienna that have resumed during the weekend.
European Stocks at Fresh Peaks
European markets closed higher on Monday, hitting record highs as expectations of a significant rebound in economic activity are building while concerns about tapering took a back seat. European Central Bank President Christine Lagarde said monetary and fiscal stimulus should remain until there are clear signs that a "firm, solid and sustainable" economic recovery is underway. Still, Lagarde noted that there could be less need for the ECB's emergency support measures in future, as the recovery is gathering pace faster than previously anticipated. The Federal Reserve, which meets later this week, has also been reassuring investors of its support for the economy, saying that the rise in prices would be temporary. This current fiscal and monetary environment also leaves room for the euro to capitalise on further dollar weakness.
Romania Current Account Gap Widens in April
Romania's current account deficit widened to EUR 1.68 billion in April 2021, from EUR 1.28 billion in the same period last year, as the goods gap increased sharply to EUR 2.01 billion from EUR 1.76 billion and the primary income deficit rose to EUR 0.52 billion from EUR 0.42 billion. Meanwhile, the services surplus was little-changed at EUR 0.77 billion, while the secondary income surplus edged down to EUR 0.09 billion from EUR 0.13 billion. Considering January-April, the current account deficit widened to EUR 4.71 billion, from EUR 2.27 billion in the same period of 2021.
US Inflation Expectations at Record Levels
Median year-ahead inflation expectations in the US jumped for the 7th straight month to a new record high of 4 percent in May of 2021. Expectations also went up for home price and rent price changes, earnings, income, and spending growth. Meanwhile, median inflation expectations at the three-year horizon increased to 3.6 percent from 3.1 percent, the second-highest level ever. The increase at both horizons is particularly pronounced among respondents age 60 and over and among those with a high school degree or less.
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