Volatile markets, on the lookout for US inflation, China mining and a multi-million dollar deal

Volatile markets on the lookout for US inflation

Wall Street rose slightly as inflation concerns waned and US Treasury yields fell for the fourth day in a row. In Europe there was stability.

Wall Street’s major indexes rose Tuesday in a volatile session in which the Nasdaq led gains as inflation concerns waned and US Treasury yields fell for the fourth straight day.

The Dow Jones Industrial Average was up 22.20 points, or 0.06%, at 34,416.18 points. The S&P 500 rose 2.92 points, or 0.07%, to 4,199.97 units and the Nasdaq Composite advanced 29.20 points, or 0.21%, to 13,690.37 units.

The S&P 500 and Nasdaq started the week up around 1% after officials said the Federal Reserve will maintain its ultra-expansive monetary policy, dispelling concerns that higher prices could force the central bank to withdraw its stimulus.

Yields on 10-year Treasuries fell to a new two-week low on Tuesday.

“Since we bottomed out sometime in the past week, the market has gained some stability every day and we see the downside risks receding. The mood is optimistic, but it is quite modest,” said Randy Frederick, Vice President of Operations and Derivatives for Charles Schwab in Austin, Texas.

The PCE (personal consumption expenditure) data to be released later in the week will be key to having a better judgment on inflation and we would expect the market to remain somewhat directionless until that data is released, “he added.

Market attention will focus on the US PCE report due Thursday, the Fed’s favorite inflation gauge. US consumer confidence remained high in May, the latest data showed.

Among the S&P sectors, technology, consumer discretionary and finance were up slightly, while energy and utilities fell about 1%.

Boeing shares were up 2.4% after aircraft leasing firm SMBC Aviation Capital agreed to purchase an additional 14 737 MAX aircraft.

Europe Stock Exchanges

European stocks were stable on Tuesday as a multi-million dollar real estate deal in Germany and a rally in tech stocks were offset by losses in the mining sector on concerns over Chinese markets.

The pan-European STOXX 600 Index ended virtually unchanged at 445.20 points, after hitting an all-time high of 447.15 earlier in the day.

German benchmark DAX rose 0.2%, having hit an all-time high earlier in the session on news that Europe’s largest residential property group, Vonovia SE, agreed to take over rival Deutsche Wohnen for around 18,000 million euros (22,000 million dollars).

Deutsche Wohnen climbed 15.7%, the biggest gain for the STOXX 600, while Vonovia lost 6.1%. Europe’s broader property index added 0.4%, briefly hitting a one-year high.

Technology stocks advanced 1.3% after their Wall Street peers rose in the global session on new insistence from the US Federal Reserve authorities that expansionary monetary policy would be maintained.

Meanwhile, mining stocks lost 1.7%, after China said it would tighten price controls on key commodities, after warning against hoarding and speculation to cool a soaring rally in industrial commodity prices.

Investors weighed data that showed the German economy contracted more than expected in the first quarter against the improvement in business confidence in May, while companies became more optimistic in light of the decline in coronavirus infections and the steps towards economic reopening.

The STOXX 600 is up 12% on the year, largely in line with Wall Street’s S&P 500, as optimism about the economic reopening boosted stocks in economically sensitive sectors such as finance and energy.