Global stock markets gained last week on the back of upbeat economic data and a strong earnings season. This week, the United States (US), China, and India will be publishing inflation updates for April. Market players will also be looking at the first-quarter GDP releases of the United Kingdom (UK), Malaysia, and the Philippines. Factory production numbers from the US, the Eurozone, and India will also be keenly watched.
Other important data to follow include US retail sales and consumer confidence, Japan’s current account, and Australia’s business morale. The European Central Bank (ECB) will be publishing its monetary policy meeting minutes, while central banks in Mexico and the Philippines will be deciding on interest rates.
In the US, the disappointing payroll report eased worries about the Federal Reserve reducing its massive support anytime soon. Nonfarm payrolls increased by 266K only, well below forecasts of nearly one million, while the unemployment rate rose to 6.1%. The report raised concerns of a slower-than-expected jobs recovery and drove investors to the safety trade of big tech.
Investors focus on value-oriented stocks amid prospects of robust economic recovery and cemented expectations that the US central bank will remain ultra-accommodative for the foreseeable future. For last week, the Dow surged 2.7% to snap a two-week losing streak.
The dollar index bottomed around 90.20 on Friday last week, a level not seen since late February, and recording its worst week since November 2020 in reaction to a payroll report that showed the US economy adding 266,000 jobs in April, well below market expectations of almost one million. The yield on the benchmark 10-year Treasury note fell to 1.51% on Friday, after April’s jobs report fell short of expectations.
In Europe, stock markets extended their gains on Friday to end the week on a positive note, on the back of upbeat economic data and a strong earnings season. German industrial production rose in March by the most in five months, while better-than-expected exports and imports figures from Europe’s largest economy signaled a solid rebound in global demand.
Also, the Eurozone’s Purchasing Managers Index (PMI) survey released earlier this week showed the bloc’s private sector activity grew at a faster pace in April, as the service activity returned to growth; and the Eurozone retail sales rose firmly in March, despite renewed lockdown measures. In April, the euro booked a 2.5% monthly gain against the greenback, supported by optimism about a strong economic recovery and signs of an acceleration in the vaccination pace in Europe.
Meanwhile, Chinese shares closed near 2-week lows on Friday, closing 0.8% lower over the holiday-shortened trading week amid sustained regulatory concerns as robust economic data fueled optimism for a global economic recovery.
China’s foreign exchange reserves increased for the first time in four months to US$3.198 billion in April of 2021 from US$3.17 trillion in March. China’s trade surplus was at US$42.8 billion in April 2021, compared with a surplus of US$45.0 billion in the same month a year earlier, amid an improving global demand and higher commodity prices. Exports jumped 32.3%, and imports soared 43.1%. The country’s trade surplus with the US increased to US$28.11 billion in April from US$21.37 billion in March. Considering the first four months of the year, the trade surplus has widened sharply to US$157.91 billion, from US$55.65 billion in the same period of 2020, as exports jumped 44% year-on-year to US$973.7 billion while imports soared 31.9% to US$815.79 billion.
Japanese shares gained 1.16% last week as investors remained optimistic about the prospects of a global recovery following better than expected US data in recent weeks. India stocks closed at a near 1-week high last week, buoyed by an upbeat US weekly jobless claims report, along with recent solid economic data in the world’s largest economy.
In local news, India on Friday logged a record daily rise in virus cases of 414,188, taking the total caseloads to 21.49 million. India added 1.57 million cases and just over 15,100 deaths last week alone, according to Reuters.
At Jakarta bourse, the composite index of the Indonesia Stock Exchange (IDX) closed down 0.7% at 5,928 on Friday last week, while buying by foreign investors kept the correction. They booked a net buy of Rp146.56 billion, bringing the year-to-date net buy to Rp9.34 trillion. The rupiah strengthened to Rp14,289 against the US Dollar. This week, trading in stocks and currency would slow as the bourse will close on Wednesday, Thursday, Friday for the Eid al Fitr (Lebaran) holiday.
By Yohannes Obor
