Bloomberg News reports that stocks and the US futures were found trimming their advance, and European bonds slipped after hotter than anticipated German inflation figures added to the pressure for action from the central bank policymakers to combat escalating costs.
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The European equities are still on course for a winning streak that is the longest since March for the fourth day of gains. The luxury stocks were found to outperform on Monday as there was a boost in sentiments by China’s plans for reopening. The theater chain operator Cineworld Group Plc’s shares soared after the movie “Top Gun: Maverick” topped the charts for the Memorial Day weekend at the box office. The largest digital currency, Bitcoin, posted its biggest gain in two weeks, soaring beyond $31,000 for the first time since May 16th.
S&P 500 futures and NASDAQ 100 contracts spiked as a sign of a bounce in US stocks that may have further run for the best week since November 2020 on Wall Street. The S&P 500 wiped clean the losses incurred in May, thereby snapping a string of decline of seven weeks as there was a rebalancing of portfolios by the institutional investors into the month-end.
The dollar was found slipping for a third day against major peers as there was a loss of appeal of the havens amidst a slight mood improvement. The cash treasuries are not trading due to the holiday on Memorial Day.
Bloomberg News reports that traders are contemplating whether the selloff’s bottom is near as the investors have continued to buy the dip following one of the worst starts to equities for the current year. However, a certain degree of concern continues to haunt due to spiking food inflation from the ongoing Russian and Ukrainian war, fears of recession, and economic activity that continues to be stunted.
German inflation reached another all-time high, adding to the urgency of the exit of the European Central Bank from the crisis-era stimulus following numbers from Spain that topped the economists’ estimates. The reports reached ten days before the crucial ECB meeting where the officials are slated to announce the conclusion of purchases of large-scale assets and thereby confirm plans to hike rates of interest in July for the first time in more than ten years.
The traders will be looking forward to the US payroll numbers towards the end of this week to gauge the path of the Federal Reserve’s tightening plans as it is striving to rein in inflation. In the meantime, the Federal Reserve is set to initiate the shrinking of the $8.9 trillion balance sheet starting Wednesday.
Governor of Federal Reserve Christopher Waller revealed that he intends to keep increasing the interest rates by half a percentage point until inflation does not ease back towards the goal set by the US central bank.
