Shares of Wall Street fluctuated over the weekend ahead of US inflation data, which may determine the future direction of central bank monetary policy.
The S&P 500, the dominant stock of Wall Street, traded early. The technology-focused Nasdaq Composite Index slipped 0.1 percent.
Stoxx Europe 600 gained 0.4% to reach record lows, but as investors changed relatively cheap European shares.
Economists surveyed by Bloomberg on Thursday expect US inflation data to show that consumer prices rose 4.7 percent in April from a year earlier, after unexpectedly strong growth in April. The main inflation, which eliminates unstable food and energy expenditures, is projected to be 3.4% per annum, which is the highest since 1993. Data from the St. Louis Fed,
Next week, the Federal Reserve sees strong inflation as a temporary effect of reopening the economy after the epidemic. Investors are wary of rising prices, which could force monetary policymakers to raise interest rates faster than expected. Since March of last year, the Fed has been acquiring $ 120 billion in assets every month և fixing borrowing costs at a record low.
“It will be a transitional year for monetary policy,” said Gergely Majoros, a member of the investment fund of the European fund manager Karminyak. After learning of the strong support of central banks, he added that “the transition will be difficult for investors to manage.”
US Treasury Secretary Ethan Yellen told Bloomberg on Sunday that it would be a “plus” if President Biden’s multimillion-dollar fiscal stimulus led to slightly higher rates.
“For a decade we have been fighting extremely low inflation, interest rates that are very low,” Yellen said.
Financial markets were “hyperactive on cheap money,” added Patrick Spencer, vice president of shareholding at Baird, referring to the so-called increases. meme shares prefer retailers և furious price movements in cryptocurrencies. “We need to get out of sugar.”
Carmignac Majoros added that stock market investors were also concerned that companies were failing to meet analysts’ growing earnings expectations.
On both sides of the Atlantic, after the first-quarter earnings season, when economies reopened and businesses benefited from reviving demand, forecasters broadly updated their expectations for second-quarter results.
“Analysts’ optimism is at an all-time high,” commented Liberum strategists Joachim Clement and David Mack in a research paper.
“We expect that next revenue season will be a reality test for many analysts and investors.”
The 10-year yield on US Treasury bonds, which reversed its price, increased by 0.01 percentage points to 1,570 percent. Yields have risen by about 0.9% since the beginning of 2021 as investors forecast higher inflation, which erodes the value of fixed interest rates on bonds.
Earlier in Monday, Brent crude fell 0.1 percent to $ 71.82 a barrel in Asian trading, hitting a three-month high since May 2019.
In currencies, the Mexican peso rose $ 0.8% to $ 19.80 after Andres Manuel Lopez Obrador. It looked perfect to lose the two-thirds majority in the lower house of the Mexican Congress, which he needed for significant constitutional changes. The euro rose 0.1 percent against the dollar to 1.2176 dollars.