Stocks drop as traders weigh recovery, new infections

LONDON — Fears about inflation and rising infections in several countries dimmed the mood on global markets on Monday and drove the dollar down, although there was good news on trade as Brussels and Washington called a truce on metals tariffs.

The Dow Jones Industrial Average was close to flat and the tech-heavy Nasdaq fell 0.76 per cent at open, while European markets mostly fell in afternoon trading.

"US stocks are edging lower following mixed Chinese economic data, concerns that Taiwan and Singapore success in fighting COVID is in jeopardy, and after the Empire State manufacturing survey solidified the inflationary theme that is running wild on Wall Street," Oanda analyst Edward Moya commented.

Chinese retail sales fell short of expectations, cooling hopes that consumption there would help power a global post-coronavirus recovery, while mounting price pressures in the US are raising fears the Federal Reserve (Fed) could call time on its easy-money policy.

The Fed has said it will ride out volatility in inflation data caused by comparisons with the early months of the pandemic last year.

But National Australia Bank's Rodrigo Catril warned of "rising concerns that inflation is becoming unanchored, with a decline in consumer sentiment a reflection of the negative impact inflation is having on disposable income".

Focus this week is on the release of minutes from the Fed's latest policy meeting at the end of last month, which will be pored over for an idea about members' views on inflation in light of surging commodity prices, supply bottlenecks and economic reopenings.

In trade, the US and EU called a truce on Trump-era tariff battles over steel and aluminium, announcing "discussions to address global steel and aluminium excess capacity" that will see Brussels temporarily suspend a plan to increase tariffs on high-profile American goods.

Musk hits bitcoin 

Also on the plus side, "optimism of robust economic and earnings growth this year persists as COVID-19 restrictions ease amid ramped-up vaccine rollouts on both sides of the pond", Charles Schwab analysts wrote.

In company news, AT&T said it plans to merge its WarnerMedia division with Discovery, creating a new standalone media giant to compete with rivals like Netflix and Disney+.

Meanwhile, trading in Hong Kong's largest pro-democracy media group was suspended on Monday, days after authorities froze the assets of its jailed owner Jimmy Lai under a new national security law.

Next Digital Limited — which publishes the Apple Daily newspaper — said it would halt trading "pending the release of an announcement" about Lai's frozen assets, in a statement to the city's stock exchange.

Elsewhere, bitcoin fell to $42,185 briefly, its lowest since February, after Elon Musk on Sunday appeared to suggest his Tesla carmaker may sell — or already had sold — its holdings in the cryptocurrency.

The unit later pared the losses to sit at $44,811.

Tesla had already hammered the digital currency last week when it said it will halt bitcoin transactions because of environmental concerns.