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    Stocks Give Up Gains on Fears of Inflation, USD Retreats – May 18

    Asian Markets Mixed, Gold Reaches Highest Level since May 7

    US stocks retreated for the first time in three sessions. The US dollar declined, while investors were discussing risks to the buoyant economic outlook, namely inflation and coronavirus pandemic raging elsewhere in the world. The benchmark S&P 500 entered a negative area, pushed lower by the technology sector and communication services. Energy shares meanwhile climbed. The tech-heavy Nasdaq was under Apple’s and Microsoft’s pressure. Semiconductor shares were weakened, with the Philadelphia Semiconductor Index sliding 10% from a peak in early April. 

    In Europe, the Stoxx Europe 600 Index inched lower. The Asian markets were mixed. The Nikkei 225 advanced 2.09%. The Topix added 1.54%. The Hang Seng rose 1.42%. The S&P/ASX in Australia edged 0.06% higher.

    Analysts say that markets will continue to be prone to volatility, potentially destabilized by inflation data and new outbreaks of coronavirus. Yet they still consider that inflation worries will not undermine stocks’ movement higher. Rally in stocks is expected to be led by cyclical parts of the market as more and more countries reopen after the pandemic. 

    While oil prices rose, Bitcoin took a dive to $42,133 before stabilizing after shuttling over the weekend. The cryptocurrency’s price was thrown up and down by Elon Musk’s tweets in which he discussed carbon emissions and his selling intentions. Coinbase Global tumbled to a record low, below the reference price quoted in its April direct listing. Gold soared to the highest level in more than three months. 

    This week brings the release of some crucial economic data. Investors are looking forward to the publication of the Federal Reserve’s minutes on Wednesday. Since the earnings season is coming to an end, investors will focus entirely on inflation. 

    These are the major moves in the markets that traders should watch on Tuesday:

    Stocks

    The S&P 500 gave up 0.3% during the trading session in New York. The Nasdaq 100 shed 0.6%. The Dow Jones Industrial Average lost 0.2%. The MSCI World Index remained unchanged. The FTSE 100 in London advanced 0.42%. The German DAX gained 0.36%. The CAC in France surged 0.3%. 

    Currencies

    The US dollar Index extended its losing streak beyond the second day on Tuesday. This is the index’s most prolonged decline since May 10. The euro inched 0.1% higher to trade at $1,2158. The British pound climbed 0.3% to $1,4142. The Japanese yen jumped 0.2% to 109.17 per dollar. The USD/CAD pair declined 0.3% to trade at 1.2024. USD/CHF was 0.65% lower at 0.8974. The AUD/USD pair changed hands at 0.7799, 0.45% up. 

    Commodities

    West Texas Intermediate crude gained 1.5% to trade at $66.00 a barrel. Brent crude added 0.42% to $69.88 per barrel. Gold futures soared 1.6%, reaching the highest level since May 7. Silver surged 1.28% to trade at $28.64 per ounce. Platinum sank 0.94% to $1,231.47 per ounce. Copper jumped 0.99% to $475.80. 

    Bonds

    The yield on 10-year Treasuries rose one basis point to 1.64%. Germany’s 10-year yield climbed one basis point to the highest level in about two years. Britain’s 10-year yield was little changed at 0.86%. 

    Looking forward

    These are the major events traders should follow this week:

    • Reserve Bank of Australia publishes minutes of its latest meeting on Tuesday.
    • The Federal Reserve publishes minutes from its April meeting on Wednesday, which may provide clues to officials’ views on the recovery and how they define “transitory inflation.” 

    Have a successful trading day!

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