NEW YORK – World stock markets traded in a narrow band yesterday, tracking inflation concerns, as traders weighed economic growth and price growth prospects as countries come out of lockdown.
Wall Street equities spent most of the day in positive territory, but both the Dow and S&P 500 ended only slightly higher. The gains in the tech-rich Nasdaq were somewhat more impressive at 0.6%.
Asia’s main stock markets also closed with modest gains and European markets likewise struggled to stay out of the red with London and Paris flat and Frankfurt slightly down.
After rallying for more than a year, equities have recently been jolted by fears that a forecast surge in economic activity – fueled by reopenings, stimulus and vaccinations – will send prices soaring and force central banks to wind back their ultra-loose monetary policies sooner than flagged.
A succession of US Federal Reserve officials have insisted that while the rebound will likely fan inflation, it will not last long and the central bank will not step back from its supportive measures – including record low interest rates – for the foreseeable future.
Yesterday, Fed vice-chairman Randal Quarles said the current spike in inflation is unlikely to pose a persistent threat to the US economy, and that prematurely heeding calls to act could derail the recovery from the Covid-19 downturn.
But this week’s choppiness in stocks shows that “investors continue to weigh optimism on global economic recoveries against lingering concerns regarding rising inflation pressures,” said a note from Charles Schwab.
The yield of long-term US Treasuries, a key gauge of future interest rates, has stabilized after their recent sharp increase set off alarm bells.
Fawad Razaqzada, market analyst with ThinkMarkets, judged sentiment “positive as the Fed and other central banks continue to keep their asset buying programmes running at record pace just as some of the major global economies are emerging impressively from the impact of the pandemic.”
Among individual companies, Amazon edged up 0.2% after announcing it would acquire the storied MGM studios for US$8.45 billion (RM35 billion), giving the US tech giant a vast library to further its ambitions in streaming.
Ford jumped 8.5% as it said it is ramping up investment in zero-emission cars and by 2030 expects 40% of its sales volume to be comprised of electric vehicles.
ExxonMobil climbed 1.2% after shareholders voted to install at least two board nominees from activist group Engine No. 1, which favors more forceful action on climate change. – AFP, May 27, 2021
