- Stock markets mostly rose Thursday, supported by a strong start to the US earnings season.
- The dollar traded mixed against its main rivals, while oil prices dropped a day after strong gains.
- Analysts said fears over high inflation continued to be a big risk for markets, as investors bet that the explosion of economic activity fanned by vaccines, reopenings and stimulus measures would force central banks to wind in their ultra-supportive monetary policies.
Stock markets mostly rose Thursday, supported by a strong start to the US earnings season, as traders shrugged off news of weaker growth expectations in Europe's biggest economy Germany.
The dollar traded mixed against its main rivals, while oil prices dropped a day after strong gains on a forecast-beating drawdown in US stockpiles.
"The main event remains earnings season, with investors hoping that the trend of rebounding corporate income is one that will persist... (so) providing the real foundation for further gains in stock markets," noted Chris Beauchamp, chief market analyst at IG trading group.
Profits soared in the first quarter at three US banking giants thanks to an improving macroeconomic backdrop that has reduced the need to set aside funds for bad loans.
JPMorgan Chase, Goldman Sachs and Wells Fargo each notched earnings at least four times higher than the same three-month period of 2020, boosted in part by releasing funds that had been held in reserve in anticipation of a big pandemic downturn.
In Europe, which is struggling with renewed lockdowns and slow vaccine rollouts amid rising Covid cases, leading research institutes said German economic growth will be weaker than expected in 2021.
Germany's gross domestic product will expand by 3.7% this year, according to five economic think-tanks, revising down more optimistic predictions by one percentage point.
Traders are also keeping an eye on developments in the pandemic crisis as infections in some countries rise and after vaccine programmes were dealt a blow by blood clot concerns over the Johnson & Johnson jab as well as that from AstraZeneca.
Analysts said fears over high inflation continued to be a big risk for markets, as investors bet that the explosion of economic activity fanned by vaccines, reopenings and stimulus measures would force central banks to wind in their ultra-supportive monetary policies.
"You're going to see this tug-of-war continue within markets as investors weigh the prospects of a strengthening economy with the risk of rising inflationary pressures," said Adam Phillips, of EP Wealth Advisors.
Federal Reserve boss Jerome Powell has again repeated the bank's pledge to stay fast on its policies until it is happy inflation is running high for some time and unemployment is tamed.
Observers pointed out that he did suggest the Fed would wind down other easing policies, including its bond-buying programme, before lifting interest rates.