After a couple of worry-free days, the spectre of inflation came back to haunt global financial markets.
The American jobs data miss last week appeared to have quelled concerns only for a sharp spike in commodity costs and surging factory prices in China to unsettle the livestock ahead of US CPI data later this week.
Fears of a pre-emptive rise in interest rates prompted a 2.5% drop in the Nasdaq that then sent ripples through Asia’s main bourses.
Why this should then have such a pronounced effect on the Footsie, which should be a beneficiary of the switch out of growth and into value stocks, was a bit of a head-scratcher.
Still, the market’s immediate reaction isn’t always measured or logical.
You had to shift down to the FTSE 250 to find the day’s risers, with none on the Footsie at all. And even then the moves were piecemeal.
Morrisons (LON:MRW) nudged up a penny after what can best be described as a solid if unspectacular first-quarter trading statement.
“There have also been some notable early successes from the gradual easing of lockdown, with fuel sales close to pre-pandemic levels and with an increase in sales of food to go products positioning the group well for the coming months,” said Richard Hunter, head of markets at Interactive Investor.
“Alongside a sharp decrease in relative Covid direct costs, the door will be open to greater overall profits.”
Proactive news headlines
The City Pub Group PLC (LON:CPC) said trading has been encouraging since pubs were allowed to reopen for outdoor trading, with 24 of its 45 pubs open at present but unable to serve thirsty customers indoors.
Angling Direct PLC (LON:ANG) said it will meet market expectations for the current financial year after swinging to a profit during the pandemic.
Coinsilium Group Limited (LON:COIN) said its subsidiary Nifty Labs has started development work on a new non-fungible token (NFT) project to create an ‘NFT on Bitcoin’ marketplace platform powered by the RSK blockchain, a smart contract platform secured by the Bitcoin network.
Kromek Group PLC (LON:KMK) achieved significant revenue growth during the second half of the 2021 financial year, after orders and shipments of the company’s medical, nuclear and security screening detection technology resumed midway through the first half.
Drilling has now begun on the Kitlanya East in Botswana, a project held by Kalahari Metals, which is 50.01% owned by Metal Tiger PLC (LON:MTR).
Mobile payments specialist Bango PLC (LON:BGO) has entered into a partnership with NTT DATA to expand payments across Asia. Merchants using the Bango Platform to offer online payments can now expand their footprint to users in Indonesia, Malaysia, Thailand, Hong Kong, Philippines, and other key Asian markets.
Tirupati Graphite PLC (LON:TGR) announced that its planned investor webinar on the Investor Meet Company platform has been rescheduled to 19 May at 10:30am BST. The live presentation from executive chairman Shishir Poddar and two other directors is open to all existing and potential shareholders, with questions invited in advance or during the event.
AEX Gold Inc (LON:AEX, TSXV:AEX) notified that its annual and special general meeting will take place online on June 9 at 10am Toronto time.
Bahamas Petroleum Company PLC (LON:BPC) announced that it will extend the latest time and date its open offer from 11am on 12 May to 11am on 18 May.
6.50 am; Snapback predicted
The FTSE 100 is likely to be yanked back from its recent 14-month highs as inflation worries send global stock markets into a tizzy.
After faltering at the start of the week, with a six-point drop, London’s benchmark of blue-chip shares has been called 87 points lower on Tuesday by spread-betters in the City.
Wall Street suffered a major nosebleed overnight after its record highs last week, with a tech sell-off leading to the Nasdaq tumbling 2.6% and the S&P 500 dropping 1%, while Dow Jones notched another record but ended with a 0.1% decline.
Asian markets are in charging lower this morning, with the Nikkei falling 3.2% and the Hang Seng retreating 1.7%.
“What is most interesting about the price action overnight is how quickly the inflation theme has remerged,” said market analyst Jeffrey Halley at Oanda.
“Precisely one day, in fact, after a very deflating US jobs number on Friday. A very dovish set of comments from Chicago Fed Evans were also ignored. Inflation nerves just won’t go away.”
He added: “The falls overnight on equity markets, notably technology, are likely to be just as much due to extended shorter-term valuations and nervous investors than to inflation prospects. Goldman Sachs may also be partially responsible, publishing a report on technology stocks highlighting that regulatory risks are the biggest threat to the big-tech story.”
Further twists and turns in the inflation story are possible this week with official inflation data to be is released tomorrow, followed by 10-year and 30-year bond auctions.
However, says Halley, if tonight’s JOLTs job openings report for April comes in much lower than the forecast 7.5mln jobs tonight, “I expect the inflationistas to breathe easier once again” – for now.
Around the markets
Pound flat at US$1.4132
Brent Crude Oil down 0.9% at US$67.69
Gold flat at US$1,836.88
Bitcoin down 6.5% (over 24 hours) at US$55,084.7
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly lower on Tuesday, with Taiwan leading declines across the region following a +4% drop for the benchmark Taiex in afternoon trade.
The Hang Seng index in Hong Kong fell 1.83% while the Shanghai Composite in China gained 0.19%.
In Japan, the Nikkei 225 tanked 3.14% and South Korea’s Kospi declined 1.36%.
Shares in Australia slipped, with the S&P/ASX 200 trading 1.07% lower.
Proactive Australia news:
St George Mining (ASX:SGQ) (FRA:S0G) has completed a $7 million private placement, issuing a total of 85,365,854 shares at a price of $0.082 per share to institutional and sophisticated investors.
Triangle Energy (Global) Ltd (ASX:TEG) and Pilot Energy Ltd (ASX:PGY) have executed joint venture agreements and access deeds formalising the WA-481-P upstream joint venture and the Cliff Head Wind and Solar joint venture.
Maximus Resources Ltd (ASX:MXR) has received strong gold intersections of up to 10.5 g/t gold within wide zones of mineralised stockwork at S5 prospect around 300 metres south of the historic high-grade Wattle Dam Gold Mine in Western Australia.
Tietto Minerals Ltd (ASX:TIE) has received bonanza grade gold results from infill drilling at Abujar‐Gludehi (AG) deposit, part of its 3.02-million-ounce Abujar Gold Project in Côte d’Ivoire, West Africa, which is on track to be West Africa’s next gold mine.
Miramar Resources Ltd (ASX:M2R) extended the Marylebone target strike length to 1.7 kilometres during recent phase-2 aircore drilling, which returned 4-metre composite assays between 0.25 g/t and 1 g/t gold at depths of 44 to 60 metres within the Gidji joint venture project in Western Australia.
Arafura Resources Ltd (ASX:ARU) (OTCMKTS:ARAFF) (FRA:REB) has completed a feasibility study update for its 100%-owned Nolans Neodymium-Praseodymium (NdPr) Project in the Northern Territory, confirming ultra-low operating costs of US$24.76 per kilogram of NdPr oxide.
Twenty Seven Co Ltd (ASX:TSC) (FRA:U9V) is set to start auger drilling at the 100%-owned Yarbu Gold Project, around 160 kilometres northeast of Southern Cross and about 90 kilometres northwest of TSC’s Mt Dimer Project in Western Australia.
Marvel Gold Ltd (ASX:MVL) (FRA:GR2) plans to unlock the value of its advanced Chilalo Graphite Project in Tanzania by spinning it out into a newly incorporated, wholly-owned subsidiary Evolution Energy Minerals Limited, which proposes to undertake an IPO to facilitate listing on the ASX.
European Lithium Ltd (ASX:EUR) (FRA:PF8) (VIE:ELI) is set to add to its strategic lithium endowment in the heart of Europe after entering a Collaboration Agreement with Jadar Resources Ltd (ASX:JDR) (FRA:R1E) on its Austrian tenements.