Global shares paused on Monday after a strong end to the prior week, while gold hit a three-month high as surging COVID-19 cases in some Asian countries and inflation pressures tempered demand for riskier assets.
Markets have been skittish in recent weeks as bumper supplies of central bank stimulus and rising prices in the United States and other countries fuel concerns some economies could overheat, requiring policymakers to tap on the brakes.
While last week’s recovery was driven by supportive comments from U.S. Federal Reserve officials, the market remains twitchy around any sign of inflationary pressures building, such as those seen in overnight economic data from Asia.
· The spread of the coronavirus was also a drag with Singapore to shut most schools from Wednesday after reporting the highest number of local infections in months.
· Gold scales over 3-month peak on virus woes, lower U.S. yields
Gold prices rose on Monday to their highest level in more than three months, as a dip in U.S. Treasury yields and worries over surging COVID-19 cases in some Asian countries boosted demand for the safe-haven metal.
Spot gold was up 0.6% at $1,854 per ounce by 0649 GMT, after hitting its highest since Feb. 2 earlier in the session.
U.S. gold futures jumped 0.8% to $1,853.20.
· “Treasury yields are falling and on the other hand, there seems to be fears about virus resurgence in Singapore, Taiwan and broader Asian-Pacific markets... driving up demand for safety,” said Margaret Yang, a strategist at DailyFX.
· The US 10-year yield was down 2 bps at 1.647%.
· Benchmark U.S. 10-year Treasury yields slipped to their lowest in nearly a week, reducing the opportunity cost of holding non-interest bearing gold.
· The US 10-y yield is still in a consolidation pattern between 1.53 and 1.77%.
· Singapore will shut most schools from Wednesday after the city-state reported the highest number of local COVID-19 infections in months, while Taiwan imposed new curbs on gatherings and movement.
· In India, the world’s second-worst pandemic-hit country after the United States, the tally of coronavirus infections reached nearly 24.7 million on Sunday.
· Investors now await minutes of the U.S. Federal Reserve’s last meeting due on Wednesday for more cues on the central bank’s monetary policy and any comments on rising inflation.
· “Inflation is going to be a strong driver behind gold in the short- and medium-term. There are always concerns about Fed tapering, but the latest non-farm payrolls report is helping to contain that fear,” Yang said.
· Gold is seen as a hedge against rising inflation.
· Spot gold may rise to $1,876 per ounce, as it has broken a resistance at $1,847, according to Reuters technical analyst Wang Tao.
· Elsewhere, silver was up 1% at $27.70 per ounce, after hitting a one-week high earlier in the day.
· Platinum gained 0.5% to $1,231.51.
· Palladium edged 0.1% higher to $2,895.61.
· The U.S. data calendar is light this week, putting the focus on minutes of the Federal Reserve’s last policy meeting for any clue when officials there might start to talk about tapering.
· Job fears, price spikes mean heartburn for Biden White House as economy revs up
They're a bad memory for Americans old enough to remember the 1970s - but they're also likely causing a few sleepless nights in the White House, as the United States' economic recovery from the unprecedented coronavirus recession hits some bumps.
The jolts are dampening consumer confidence, ramping up inflation fears, and helping Republicans build their case against President Joe Biden and his ambitious plans to revamp the U.S. economy with trillions in new spending.
· U.S. administers 270.8 mln doses of COVID-19 vaccines - CDC
The United States has administered 270,832,342 doses of COVID-19 vaccines in the country as of Saturday morning and distributed 344,503,395 doses, the U.S. Centers for Disease Control and Prevention (CDC) said.
Those figures are up from the 268,438,666 vaccine doses the CDC said had gone into arms by Friday out of 341,865,945 doses delivered.
The agency said 156,217,367 people had received at least one dose, while 121,768,268 people are fully vaccinated.
· April wholesale prices in Japan, the world’s third-largest economy, rose at their fastest pace in six and a half years, as rising energy and commodities costs ate into corporate margins, although consumer price inflation remains subdued.
· In China, meanwhile, retail sales rose 17.7% in April from a year earlier, although they fell short of forecasts for a jump of 24.9%, while industrial output matched expectations with a rise of 9.8%.
· China is concerned about inflation – but it’s not the top priority right now
While investors around the world fret over inflation, China’s central bank has more problems than rising prices to worry about.
Central banks worldwide have kept monetary policies easy and interest rates lower in a bid to support growth in the wake of the coronavirus pandemic last year, and China is no exception.
Now as consumer and producer prices climb, investors are on edge as they try to discern if central banks will be raising interest rates.
But the People’s Bank of China — and economists parsing its statements — are not as worried about inflation, or expecting much monetary policy change as the country faces more pressing risks.
In its report on first quarter monetary policy released late Tuesday, the central bank focused on how the foundation for China’s economic recovery is not solid.
Zong Liang, chief researcher at the Bank of China, doesn’t expect China’s monetary policy to change until the second half of the year, at the earliest. He noted the central bank kept policy relatively tighter in the last two years versus that of other countries.
Although he expects Chinese consumers will pick up their spending in the second quarter, especially as China steps up local vaccinations, he said consumption is still in a period of recovery.
In a sign of Beijing’s caution on the economy, authorities said at a meeting Wednesday that pressure to support employment remains high. The central government decided at the meeting to extend pandemic-era support for unemployment until the end of this year.
However, the level of support was scaled back from what it was last year. China’s economy grew 18.3% in the first quarter, from a contraction last year amid the height of the pandemic.
· India's virus cases lower but WHO expert says positive tests ominously high
India on Monday reported a further decline in new coronavirus cases though daily deaths remained above 4,000 and experts warned that the count was unreliable due to a lack of testing in rural areas, where the virus is spreading fast.
For months now, nowhere in the world has been hit harder than India by the pandemic, as a new strain of the virus first found there fuelled a surge in infections that has risen to more than 400,000 daily.
Even with a downturn over the past few days, experts said there was no certainty that infections had peaked, with alarm growing both at home and abroad over the new more contagious B.1.617 variant taking hold.
"There are still many parts of the country which have not yet experienced the peak, they are still going up," World Health Organization Chief Scientist Soumya Swaminathan was quoted as saying in the Hindu newspaper.
· UK eases lockdown but Covid variant from India threatens summer freedom
· Singapore and Hong Kong to postpone travel bubble again
Singapore and Hong Kong have once again pushed back the start date of a long-anticipated air travel bubble arrangement, the two cities announced Monday.
The travel bubble, which would have allowed travelers to skip quarantine, had been planned to begin on May 26. The scheme has faced multiple rounds of delays from its initial launch date in November 2020.
· Israel pounds Gaza as fighting enters second week
· U.N. Secretary General calls for immediate Gaza ceasefire as civilian death toll increases
Reference: CNBC, Reuters, Action Forex, Brecorder
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