U.S. Equity Markets sold off sharply again on inflation fears, finishing the day lower, led by the NASDAQ which finished yesterday’s session with a loss 2.62%. Inflation was the main story once again. U.S. consumer price index (“CPI”) came in well above estimates. This sparked fears that inflation was surging, forcing the Federal Reserve to raise rates to stop the economy from overheating Fed Vice Chair Richard Clarida tried to ease some of these fears after the release. Clarida reiterated it is more focused on recovering the jobs lost during the pandemic than on gains in inflation. He added that the Fed continues to see the recent rise in prices as temporary. It believes many of these are being driven by bottlenecks such as labor shortages that are hurting production. Clarida said current easy-money policies will remain in place until the Fed can achieve its longer-term goals. But the stock market bears will continue to push the inflation narrative until they are proven wrong. That could remain a headwind for stocks. European Markets closed lower after opening higher. European Central Bank Governing Council member Klaas Knot said the region’s economy could grow by more than the 4% it’s currently projecting for this year. The European Commission followed this by raising its own expectations. The EC now sees 2021 Gross Domestic Product growth rising from 3.8% to 4.3% while also boosting its 2022 expectation. Euro-Zone Industrial Production data surged in March, but came in below expectations, signalling the regional economic recovery remained uneven. In Asia, South Korea’s unemployment data for April were weaker than expected, falling versus March, as the country’s economy has regained pre-pandemic levels of growth. China’s Ministry of Finance and other government agencies held discussions regarding property tax reform, following up on March commentary about removing speculative purchases. The People’s Bank of China conducted reverse repurchase operations, adding roughly $1.6 billion worth of liquidity to the country’s financial system. Japanese investors worried about valuations after carmaker Nissan Motor and shipbuilder Mitsui E&S guided revenue below expectations due to rising costs. Elsewhere, Gold fell 0.83% on Dollar strength while Bitcoin fell 5% on mixed news.
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