Global equity markets firm ahead of key US economic data

by Jonathan Adams
Wall Street

Wall Street’s main indexes finished the session mixed after erasing earlier gains

Global equities markets firmed on Wednesday ahead of key US economic data due later in the week as investors weighed inflation concerns and a fresh surge in “meme stocks.”

Oil prices hit the highest level in over a year on lift from a decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies to stick to the plan to gradually restore supply.

Wall Street’s main indexes finished the session mixed after erasing earlier gains near midday trading led by a jump in shares of AMC Entertainment Holdings, which nearly doubled in price on Wednesday.

This rally saw the theatre chain operator’s shares end up 95.2% at $62.55, a fresh record, which affected a group of stocks favoured by retail investors on forums such as Reedit’s WallStreetBets.

This comes despite wary investors remaining unconvinced by central bank assurances that the current inflation upsurge is transitory.

The pan-European STOXX 600 index gained 0.28% and MSCI’s gauge of stocks added 0.09%.

Markets are being driven less by fundamentals than at any time in recent memory, said Howard Fischer, a partner with law firm Moses & Singer.

As the ‘meme stock’ frenzy continues, the apparent disconnect between asset values and asset prices continues to widen. Predictions that prices and inherent value will eventually converge have, so far, proven baseless, he said.

The US Federal Reserve will begin to unwind the corporate bond holdings it acquired last year through an emergency lending facility launched to calm credit markets at the height of the pandemic, the central bank announced on Wednesday.

Central bank officials said in its Beige Book report released earlier on Wednesday that the US recovery accelerated in recent weeks even as a long list of supply chain troubles, hiring difficulties, and rising prices cascaded through the country.

This comes after a strong expansion in European and US factory activity in May had lifted world shares to record highs on Tuesday.

A weekly unemployment report and May private payrolls data on Thursday, June 3, will be followed by monthly jobs numbers on Friday, June 4, with investors looking for signs of an economic rebound and rising inflation.

Yet ahead of Friday’s crucial US jobs data, traders eagerly aim to assess what the increasing evidence of a faster-than-expected economic recovery would mean for central bank policy in Europe and the US.

The Dow Jones Industrial Average gained 25.07 points, or 0.07%, to 34,600.38, the S&P 500 added 6.08 points, or 0.14%, to 4,208.12, and the Nasdaq Composite rose 19.85 points, or 0.14%, to 13,756.33.

Investors already are stuck in the summer doldrums, with markets struggling to find direction as much of the good economic news is priced in, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Inflation and job growth will continue to be debated, he said. With the Fed and many bond market investors confident that price increases will remain temporary, others will cast a more sceptical eye on the conversation.

Brent gained $1.1, or 1.6%, to settle at $71.35 a barrel. It reached $71.48 a barrel, its highest since January 2020.

US West Texas Intermediate (WTI) crude advanced $1.11, or 1.6%, to settle at $68.83 a barrel. It hit $69.00 during the session, its highest since October 2018.

Crude oil inventories fell last week while fuel stockpiles rose, according to two market sources, citing American Petroleum Institute figures on Wednesday.



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