Asian bourses traded sideways as the region battled to shrug off the tech-led declines in the US and amid holiday-thinned conditions due to market closures in China, Japan and South Korea. Hang Seng was choppy after disappointing Retail Sales data for Hong Kong. However, market sentiment improved after data from the Ministry of Commerce of the People’s Republic of China showed China’s online retail sales jumped 29.0% in the first quarter. Online retail sales are expected to sustain a firm growth rate of 10% this year. The China Iron and Steel Association recorded a 15.6% output increase for the nation’s steel sector.
In New York, US equity markets have started mixed and traded off the highs after a miss in the ISM services data at 62.7 for April. It highlights a slight deceleration in services business activity recovery from a reading of 63.7 reported last month. However, the Energy sector was heavily outperforming as Oil continues to rise as global demand expectations accelerate. Oil works as a good inflation hedge against unexpected shocks in the case of a sustained inflationary scenario. Worth noting that positive sentiment with vaccine rollouts in Europe and Emerging Markets should keep supporting the Oil markets and other commodities. The jump in global demand is now twisting factories and transportation chains and triggering shortages of lumber, steel and computer chips, pushing asset prices higher even with several countries months to a partial economic reopening. For the sessions ahead, the focus is entirely on Friday’s jobs reports; if it shows a solid reading, the markets will be additionally sensitive to Fed policymakers speeches, spikes in commodities asset prices and coming inflationary data before the summer season.
