The Federal Reserve has begun to telegraph an eventual shift away from the easy-money policies implemented during the pandemic as evidence builds of a robust economic recovery and mounting inflation. Several Federal Reserve officials said this week that the central bank is closely watching economic developments after a stronger-than-expected surge of inflation last month and will be ready to shift policy if necessary. The Labor Department reported last week that the consumer-price index, a closely watched measure of inflation, rose 4.2% in the 12 months through April. So-called core prices, which exclude volatile components such as food and energy, rose 0.9% in April from March, the fastest one-month gain since 1981 and significantly more than economists had expected.
Fed officials voted unanimously in April to continue buying at least $120 billion of Treasury and mortgage bonds each month and to hold overnight interest rates near zero. The policies are intended to reduce borrowing costs for consumers and businesses to help spur economic growth and a quicker recovery in the labor market, which is 8 million jobs short of its pre-pandemic level. The Fed said in a statement after the April meeting that its asset purchases will continue at the current pace until the economy makes “substantial further progress” toward its goals of maximum employment and 2% average inflation. Overnight interest rates won’t be raised until those objectives are fully reached, an even higher bar.

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The Swiss stock market ended midweek trading almost across the board with markdowns. The SMI lost 0.9 percent to 11,045 points. The shares of the index heavyweight Nestle, which are considered to be defensive, held up comparatively well with a moderate decline of 0.1 percent. The two other heavyweights Roche and Novartis, however, recorded higher discounts of 0.7 and 0.8 percent. Among financials, UBS (-0.9%) failed to benefit from an upgrade to "buy" from a previous "hold" by analysts at Deutsche Bank. The share of competitor Credit Suisse was down 0.8 percent. The picture for the two luxury stocks Swatch and Richemont could hardly have been more different. While Swatch was among the top performers in the SMI with a gain of 0.2 percent, the shares of Richemont were dragged down with discounts of 2.0 percent. ABB slid even lower with losses of 3.0 percent. Among the second-line stocks, Sonova (+1.8 percent) bucked the trend. After the good half-year figures that the hearing aid manufacturer had presented on Tuesday, a number of banks have now raised their rating for the share. Julius Baer could not escape the negative sentiment despite good figures and fell 1.3 percent. The private bank has increased its assets under management to 470 billion Swiss francs in the first four months of 2021 - an increase of 8 percent compared to the end of December.

European stocks were under sharp pressure on Wednesday, tracking losses in Asia and on Wall Street, as investors remain caught up in worries about inflationary pressures, with the minutes of the Federal Reserve's latest meeting swinging into focus for later. The Stoxx Europe 600 fell 1.3%, with similar losses seen for the German DAX. The French CAC 40 and the FTSE 100 indexes were off more than 1% each. Adding to worries over global inflation, U.K. data showed consumer prices rose 1.5% on the year in April, twice the rate of inflation reported in March, according to the Office for National Statistics. Crude oil weakness dragged down shares of heavily weighted energy companies, with Royal Dutch Shell, BP and Total each down 1% or more. Technology names were under pressure, with heavily weighted semiconductor equipment provider ASML, dropping over 2%. Shares of German business software group SAP fell 1.4%. Shares of John Laing surged 11%, after New York private-equity firm KKR & Co., said it has agreed to buy the U.K.-listed infrastructure investor and manager for GBP2 billion ($2.84 billion) in cash. European Companies, Flush With Cash, Turn to Stock Buybacks:
French retailer Carrefour SA recently began its first share buyback in a decade, spurred by strong cash flow and a belief that the economic recovery is under way. And it isn't alone. This year has seen a slew of companies in Europe putting forward share repurchase programs, including luxury house LVMH Moët Hennessy Louis Vuitton SE, personal care company L'Oréal SA and oil major Eni SpA. Around 56 firms have released plans to buy their own shares so far in 2021, the most for the comparable period in three years, according to an analysis by Société Générale SA.

U.S. stocks, commodities, overseas shares and bitcoin dropped in turbulent trading Wednesday as investors’ risk appetite diminished and the Federal Reserve signaled an eventual shift away from its easy-money pandemic policies. The Dow Jones Industrial Average declined as much as 587 points in morning trading before paring its losses to less than 200 points, while other markets steadied as well. In a sign of investors pulling back from speculative bets that have abounded this year, bitcoin plunged as much as 30%, hitting a low of $30,201.96, according to CoinDesk. It later rebounded and traded at $38,390.16 of 5 p.m. ET Wednesday. The selloff in bitcoin sparked selling across other cryptocurrencies as well. In corporate news, shares of Target rose 6.1%% after the retailer reported robust quarterly sales and a jump in store visits. Shares of Take-Two Interactive Software rose about 7%. The company, which owns the Grand Theft Auto videogame, posted quarterly earnings that topped analysts’ expectations late Tuesday.

East Asia registers a moderate downward movement on Thursday, after in the U.S. the concerns about a tighter U.S. monetary policy (tapering) have received new fuel. In Tokyo, the Nikkei index oscillates around the previous day's close, at 28,042.74 points. In Hong Kong, where as in Seoul there was no trading on the previous day, market participants also speak of profit taking after the recent gains. The Shanghai Composite Index fell by 0.29%.

Long-dated U.S. government bond yields rose Wednesday, after minutes from the Federal Reserve suggested that some central bankers were beginning to consider a path to dial back easy-money policies at some point, even as the report described supply-chain bottlenecks forming in the economy as “transitory effects” of a business cycle rebounding from the worst pandemic in generations. The 10-year Treasury yield was at 1.680%, up 3.9 basis points from Tuesday’s 3 p.m. Eastern Time levels.

Berenberg lifts Holcim target to CHF 59 (52) - Hold
Citi cuts Commerzbank to Neutral (Buy) - Target EUR 7 (5.70)
Berenberg increases Saint-Gobain to Hold (Sell)/Target EUR 49 (36)

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