US equities gain despite inflationary pressures

The threat of inflation looms large in investors’ minds
Newsfeed16 Nov 2021
    Photo credit: AFP Photo


    Stocks struggled for direction on Monday (15 November) amid intense volatility in electric car giant Tesla (TSLA US) and a Treasury yield surge.

    The S&P 500 Index came off session lows as Tesla pared losses after approaching a bear market, with an almost 20% plunge from a record. The company tumbled earlier in the day as Chief Executive Officer Elon Musk raised the idea of selling more of his shares. Treasuries slumped on speculation the Federal Reserve may have to speed up its reduction of asset purchases after the fastest inflation in three decades.

    After a year dominated by relentless stock gains and a selloff in bonds, strategists have begun marketing their calls for 2022, with the threat of inflation looming large in investors’ minds.

    It is the third week of the month, when most equity options expire, and the event has repeatedly shaken up stocks this year. While history is not always a trustworthy guide, the S&P 500 has posted a 1% move – in either direction – in six of the past eight expiration weeks, data compiled by Bloomberg show.

    Global dividends just logged their best ever third quarter, setting them on course to exceed their pre-pandemic peak by the end of 2021, according to several market watchers.

    This week’s (ending 19 November) focus will be on the consumer strength, with Tuesday’s retail sales poised to show an acceleration and industry giants. Robust spending on merchandise should continue to put pressure on global supply chains, which are already straining to keep up. – Bloomberg News.

    The S&P 500 closed 0.0011% lower at 4,682.80. The Dow Jones Industrial Average slipped 0.04% to 36,087.45 and the Nasdaq Composite Index fell 0.05% to 15,853.85.



    European stocks pulled ahead to a fresh record as optimism over a robust profit outlook offset worries about inflation and growth.

    The Stoxx 600 Index was up 0.35% to 488.43 by the close in London. Retailers and utilities rallied, while miners declined with metals prices as Chinese steel production tumbled.

    Accommodative central banks and a strong results season have helped push European equities to fresh peaks, outweighing worries about a supply crunch and cost inflation.

    Investors are also continuing to watch Covid developments that may threaten the growth recovery. The Austrian region with the highest coronavirus infection rate plans to impose a lockdown for unvaccinated people.

    Royal Philips NV (PHIA NA) slumped 11%, the most since 2009, after US regulators asked for more tests on a silicone foam designed to fix the company’s recalled sleep and breathing devices. – Bloomberg News.



    The Japanese government said it will make an aggressive push to help domestic semiconductor companies expand globally, with a goal of increasing their annual revenue to more than JPY13t (USD114b) by 2030.

    The ambitious goal, roughly three times 2020’s total of JPY4.5b, was presented to a group of industry experts summoned by the Ministry of Economy, Trade and Industry (METI) at a meeting to map out the national strategy in semiconductors and digital transformation. METI plans to use input from such regular meetings to determine budgets and legislative proposals in next spring’s Diet session.

    Japanese officials expect the global chip market will double to JPY100t by 2030 relative to 2020 due to the expanding adoption of technologies like 5G wireless networking and autonomous driving. Each of those applications drastically increases the demand for silicon, and chronic shortages of production capacity over recent months have prompted chipmakers all around the world to spend heavily on expansion. – Bloomberg News.

    The Nikkei 225 Index opened 0.04% lower at 29,764.00 in early-Tuesday (16 November) morning trading, after gaining 0.56% to 29,776.80.

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