Daily Market Commentary 6th May 2021

US and European equities rebounded strongly overnight, following worrying losses in the tech sector, in previous session. EU PPI showed strong gains, reflecting the rising input pressures, which will transfer directly into consumer prices and inflation. European PMI data was flat, as expected, considering the rolling lock-downs many EU countries are experiencing. US PMI data was much more positive, although the ADP Private Sector jobs report came in lower than expected.  The EUR dipped below 1.2000, while the GBP regained 1.3900, amid surging new vehicle sales.

Commodity prices are exploding, lead by oil, which is more driven by expanding asset bubbles than demand. Commodity prices are surging to record levels and this is boosting the associated currencies, with the AUD rebounding to 0.7740, while the NZD surged back above 0.7200. NZ employment fell to 4.7%, although the measure is far from accurate, while Australian Services and Composite PMI posted strong gains. The Australian housing sector continues to boom ,with Building Permits jumping 17.4%, which follows last months 20.1%!

Monetary and Fiscal stimulus continues to push the market rallies across most asset classes and this will translate directly into inflation and rising interest rates.