In Wall Street, the S&P closed 0.12% higher from its opening levels closing at 4,374.30 after recovering from an early stumble and then losing much of its momentum by late afternoon, as a rally in technology stocks was kept in check by a slide in banks and energy companies. The benchmark index recovered some of its losses from a day earlier but finished just short of its all-time high set on Monday. Despite the gains seen by several big tech companies including Apple small company stocks continued to lag the broader market which led to the NASDAQ composite slipping 0.2% to close 14,644.95 while the Dow Jones Industrial Average DJIA added 0.1%, to close 34,993.23. Long-term bond yields were mostly lower. The yield on the 10-year Treasury note fell to 1.34% from 1.41% late Tuesday. The highlight of the day from the US markets was on Powell’s testimony before the House Panel which literally centered around the recent employment and inflation numbers. He indicated that there is the expectation that high inflation prints are transitory, and he expects labor shortages to improve in the coming months. Today’s focus would be on the Powell testimony before the Senate (14:30 London time).
Rates in the UK underperformed yesterday on the back of high CPI prints as well as hawkish comments from most BoE speakers. BoE Governor Bailey suggested that the recent inflation prints are likely to be transitory, but he expressed a greater willingness to act if risks materialized. The FTSE 100 is down 0.24% (8:40 London time) despite opening at 7,078.46.
The markets in Asia were mixed Thursday, taking their cue from a wobbly day of trading on Wall Street. China reported its economy expanded at a 7.9% annual rate in the last quarter, down from 18.3% in January-March. But that reflected a leveling off its relatively early recovery from the pandemic. Shares fell in Japan as Covid-19 cases jumped in Tokyo. Hong Kong rallied, aided by the technology sector on a report of possible cooperation between Alibaba Group Holding Ltd. and Tencent Holdings Ltd. US
Oil tumbled below $73/bbl on building US fuel inventories (US gasoline stockpiles rose by more than 1 million barrels last week, EIA data showed on Wednesday) and a potential OPEC+ agreement to increase supply. OPEC+ appears to have found a way out of its impasse over output, with the outlines of a deal coming into focus. The UAE is nearing a deal that could give the nation a more generous output limit next year and allow OPEC+ to lift supply in coming months, although talks with Saudi Arabia are ongoing, said delegates.