Daily Market Commentary 5th April 2021

Global equity markets turned negative overnight, lead by the Tech stocks, which may be way overvalued and likely to be relatively disadvantaged by the re-opening of economies. The markets were further spooked by admissions from the Treasury Secretary, Janet Yellen, that interest rates would have to rise to prevent the economy overheating. The statement of the blindingly obvious, was not received well by markets. Input costs are on the march, as measured by the PPI numbers globally, which directly translates into rising consumer prices and inflation. Debt and deficit remain the elephant in the room. The US Dollar rebounded, with the EUR falling back to 1.2100, while the GBP dropped below 1.3900.

The RBA left rates unchanged, in line with the Federal Reserve, and adopted a bland commentary. The usual proviso’s surrounding further QE action ‘as required’, while talking up the economic recovery. The AUD fell back to 0.7700, while the NZD traded back to 0.7135, following weaker Global Dairy prices. The Bank of England rate decision later in the week, should be predictable and provide little interest, while markets turn their attention to the all important Non Farm Payrolls released Friday.