Fears about a new “flare-up” of inflation, which is increasing pressure on commodity prices, are holding back world markets, with Asian stock exchanges at a two-month low and Europe starting cautiously. Uncertainty over the economic recovery is multiplying, which could be held back by a unexpected rise in inflation. After the sales of the session on Tuesday 11 May, now all eyes are turned to the US, where the data on consumer prices for April will come from: expectations are for a monthly increase of 0.3% and an annual increase of 2.3% , even if the Fed assures that these are not lasting increases, for now reassuring on the support plans.
The inflation data coming from the US «will surprise on the upside in the short term. The prices of raw materials are at their highest and there is a shortage of numerous components, primarily microprocessors, due to the re-adjustment of the offer to a rapid increase in demand ”, says Luigi Nardella of Ceresio Investors. Furthermore, the statistical comparison with the depressed prices of last year’s spring will amplify the annual variation. «Inflation, however, will most likely remain, as the central bankers say, a transient phenomenon as unemployment levels remain high, ”he adds. THE equity markets have priced in though much of the good news, “a correction is possible in the coming months; sectors and stocks with overly optimistic valuations are to be avoided ”, concludes Nardella.
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Quarterly in focus in Milan, good Poste
On the FTSE MIB, Tenaris did well while the accounts effect on Finecobank continued and the realizations hit Banca Mediolanum in the aftermath of a quarterly report above expectations. Eyes on the quarterly reports: a sharp rise for Poste Italiane after the numbers of the first three months. Snam is more prudent, which closed the quarter with growing profits and revenues and confirmed the ebitda targets for 2021. For Mediaset, profits jumped to 52.5 million in the first quarter while revenues fell to 634.2 million. The group collected 134 million dividends from Ei Towers in April. Unicredit has kicked off the reorganization signed by the new CEO Andrea Orcel. In fact, the bank has announced a new organizational structure and management team.
Worst session in Taiwan since March 2020
The wave of tech sell-off and pandemic fears hurt Taiwan, which posted its worst performance since March 2020 (-4.6% at the end). THE fears of further tightening of containment measures for the pandemic led the Taiex index to lose more than 8 percent during the session, the worst intraday decline since 1969. The Taiex index was the best performing index in Asia until the end of April and lost more than 9 percent from last month’s highs, officially entering the technical correction phase.
New decline for the Tokyo Stock Exchange, which was affected by the negative session on Wall Street caused by the fears of a rise in inflation that could change the Fed’s monetary policy stance. In Tokyo, Toyota’s better-than-expected results were not sufficient to maintain the positive trend of the first part of the session.