The ASX200 crossed the 7,300 mark for the first time ever last week, while also closing the week at an all-time end of day high. Investors seemed to shrug off better than expected US CPI figures, indicating that they believe the short-term high inflation is simply transitory.
The US majors saw a reversal of the recent trend with the Nasdaq the best performer for the week as tech benefitted from bond yields decreasing as fears decreased that short-term inflation would see interest rates rise. The Dow saw a week of consolidation, after nearing all-time highs the previous week.
The Euro Stoxx 600 enjoyed an entire week of green days, though three relatively flat days meant that the weekly gain remained rather modest. The FTSE 100 also rose, as European investors responded well to an improving economic outlook as the COVID vaccine rollout continues.
The Asian majors had a relatively flat week as investors awaited US inflation data and speculated what impact that might have on their own markets. Although the Hang Seng and CSI 300 finished the week down after a poor start to the week, they partially recovered towards the end as China and the US held tentative talks about improving trade relations.
Precious metals had a mixed week with gold continuing to lose momentum, as inflation fears in the short-term decreased, while investors looked at silver for its industrial capabilities more than for its safe haven capabilities. Still, with investors not expecting US policymakers to tighten monetary policy soon, precious metals as a whole continue to remain an attractive hedge.
The sentiment for oil continued to improve which saw another positive week for both Brent Crude and WTI Crude, with US data showing that oil inventories fell by more than expected, which is a bullish signal. With COVID-19 vaccination rates accelerating globally, demand looks strong too. Ongoing Iran nuclear talks remain a concern for oil though, as a successful agreement would lead to a lifting on embargoes currently placed on Iranian oil.
Iron ore prices rose again this week as investors continued to ignore Chinese government attempts to decrease the input costs, and indeed demand for, steel. Last week’s rise in iron prices came as data revealed that Chinese port iron ore inventories had dropped to their lowest since February, as shipment arrivals were lower than a year ago. Iron ore prices were however pressured when Chinese trade data was weaker than expected.
Copper experienced a week of consolidation as copper prices refused to drop below the $4.54/lb for long. Although China is attempting to put pressure on the price of copper, demand remains strong as personal electronics purchasing increases, while reports also indicated that Americans are increasing ammunition spending, which uses copper. On the supply side, long-term structural issues remain, which adds to the bullish sentiment surrounding the red metal.