Global Stocks Slip as Inflation Remains in Focus -- Update
May 31 2021 - 12:45PM
Dow Jones News
By Patricia Kowsmann and Xie Yu
Global stock markets slipped Monday as investors wrapped up a
month of trading dominated by concerns over inflation and the pace
of the international economic recovery.
Trading was light with holidays in the U.S. and the U.K. S&P
500 stock futures were down slightly Monday.
In Europe, Germany's DAX index slid 0.6%, dragged down by
Deutsche Bank shares, which fell 1.3%. The Wall Street Journal
reported Sunday that the Federal Reserve told the bank in recent
weeks that it is failing to address persistent shortcomings in its
anti-money-laundering controls, according to people familiar with
the matter.
The index, which opened lower, fell further after data showed
inflation in the country rose to 2.4% in May, the highest level
since November 2018.
"With headline inflation on the rise, the European Central
Bank's attempt to avoid the taper conversation will become more and
more complicated," said Carsten Brzeski, ING Groep's global head of
macro research.
In Spain, where inflation also rose to 2.4% in May, the IBEX
index fell 0.8%. Shares of utility companies dropped over a draft
bill the government is preparing that could drive down electricity
prices in the country. Endesa shares closed down almost 6%.
Italy's biggest insurer, Assicurazioni Generali SpA, launched a
$1.44 billion takeover offer for smaller peer Società Cattolica di
Assicurazione SpA, whose stock surged 15%. Italy's index bucked the
trend and closed higher.
The pan-Continental Europe Stoxx 600 index closed down 0.5%.
In Asia, Japan's Nikkei 225 fell 1%. Hong Kong's local benchmark
Hang Seng Index closed up 0.1%. In mainland China, the benchmark
CSI 300 also closed up 0.2%. An official purchasing managers index
for the manufacturing sector came in at 51.0 for May -- down
slightly from a reading of 51.1 a month earlier, but still above
the 50-mark that separates expansion from contraction.
Among individual stocks, shares of Meituan jumped more than 10%
in Hong Kong. Late on Friday, the Chinese food-delivery giant
reported better-than-expected revenue of 37 billion yuan, the
equivalent of $5.8 billion, for the three months ended March.
Financial stocks retreated, with AIA Group falling nearly 4% and
HSBC Holdings' Hong Kong shares dropping 3%.
Markets were likely to remain unsettled as investors try to
gauge the prospects for U.S. growth and price rises from data
points such as payroll figures due this Friday, said Mary Nicola, a
fund manager at PineBridge Investments. "Everyone is focused on
inflation," she said.
Ms. Nicola said a key question for investors was how this would
affect Federal Reserve policy, including the time frame in which
the central bank might begin tapering, or reducing its asset
purchases. She added that her firm was overweight European and
Japanese stocks -- holding more of these shares than the benchmarks
it tracks -- given it believed both markets were attractively
valued and stood to benefit from a world-wide economic
recovery.
U.S. markets are closed Monday for Memorial Day. For the whole
of May, the S&P 500 recovered from inflation-driven volatility
earlier in the month to record its fourth consecutive monthly
gain.
In the currency markets, the dollar inched lower, with the WSJ
Dollar index dropping 0.2% to 85.07.
Bitcoin rose almost 5% from late Friday's level to $36,877.
Write to Patricia Kowsmann at patricia.kowsmann@wsj.com and Xie
Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires
May 31, 2021 12:45 ET (16:45 GMT)
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