Stock markets fall as tech shares slide; Yellen says ‘very modest’ rates rises may be needed – as it happened

Graeme Wearden

from on 2021-05-04 20:21 (#5HDA0)

Rolling coverage of the latest economic and financial news

Earlier:

9.21pm BST

And finally, Janet Yellen seems to have clarified her comments about the need for some very modest interest rate hikes...

Treasury Sec. Yellen:

- I do not believe inflation would be an issue in the US economy

- I am not predicting or recommending a rate increase

.@SecYellen clarifies on her comments that interest rates might have to adjust to Biden's spending plan:

That's not something I'm predicting or recommending. If anybody appreciates the independence of the Fed, I think that person is me."

Yellen, speaking at WSJ event, clarifies earlier remarks on interest rates. "Let me be clear, it's not something I'm predicting or recommending."

9.20pm BST

A late update. The tech-focused Nasdaq has posted its biggest one-day fall since March.

After a stormy session, the Nasdaq Composite has ended the day down 1.9% or 261 points at 13,633.50, with worries about potential interest rate rises hitting high-value growth stocks'.

S&P 500 ends day 0.7% lower, Nasdaq sheds nearly 2% for worst day since March https://t.co/Bd9IWKyNS4

7.28pm BST

Time for a recap.

Stock markets have fallen sharply on a jittery day in the City, Wall Street and beyond.

Nasdaq having the worst day since March pic.twitter.com/W1lQKuPVGO

Fears of rising interest rates to dampen inflationary pressure as the global economy bounces back from Covid-19 has sent shares tumbling on both sides of the Atlantic.

Comments from America's treasury secretary Janet Yellen that a modest increase in borrowing costs might be needed to rein in demand was enough to send tremors through financial markets already jittery as a result of shortages of computer chips.

We are extremely optimistic about our prospects for this year and next, given the huge global fiscal and monetary stimulus introduced to counter the impact of the pandemic and the subsequent increase in consumer savings ratios and stagnation of corporate capital investment.

The chickens may well come home to roost in 2023, given the debt burden that most countries will have and the tax increases that will have to be implemented. But, digital marketing expenditure remains robust, even in a recession, as our results last year demonstrate, given its secular growth trend."

6.50pm BST

Today's tech selloff is ringing some alarm bells, at least in the short term', for investors who were bullish about the Nasdaq, says Matt Weller of Forex.com.

He points out that the index hit a fresh record high last month, amid high earnings expectations for the big tech behemoths that drive the index.

From a technical perspective, the Nasdaq 100 spent the last two weeks consolidating right at the previous highs as traders fought over whether the long-term uptrend could extend further. Today's big bearish move has provided at least a short-term answer: No.

Technical view: #Nasdaq stumbles, hinting at a potential near-term top - get our take on the key technical levels to watch after today's big selloff: https://t.co/Eb4c3Pumq7 pic.twitter.com/hzkGaUCXGY

5.57pm BST

US and European stock markets are that familiar cliche, a sea of red.

The pan-European Stoxx 600 dropped 1.5% today, led by losses in Frankfurt and Milan.

London markets might have started the day with an injection of post-bank holiday energy but by the afternoon the hangover had well and truly set in. Not enough chips the central issue today, not the kind that soaks up the alcohol but the kind that keeps supply chains moving. Today's warning came from German chip maker Infineon which is ramping up supply but estimates the current situation will results in 2.5 million less cars being produced in the first half of 2021 than had been intended.

US markets were dragged down by falling stocks in car makers and big tech - the red splodge covering the Nasdaq heat map prompted calls on social media to close the index. And if that had unsettled investors enough for a dreary Tuesday, Treasury Secretary Janet Yellen's comments that an interest rate rise would have to happen to stop the US economy from overheating and the selloff intensified.

5.48pm BST

Something to ponder....

Ugh. Bank of America's hedge fund clients selling equities at the strongest pace since at least 2008, while retail investors have been net buyers for the past 10 weeks straight. pic.twitter.com/O7gAscVZ4i

It means one of two things
a) BofA hedge fund clients are bullish on equities, but have decided they've made enough money now and it's only fair to let retail investors get a slice of the pie
b) They think equities have bad risk/reward right now

5.40pm BST

Treasury secretary Yellen's suggestion that US interest rates may need to rise very modestly to prevent the economy overheating has fuelled concerns that the Federal Reserve could tighten policy...... even though she no longer works there.

Fawad Razaqzada, analyst at ThinkMarkets, explains:

For a minute, it felt like Janet Yellen had been back to her former role as the Fed chair. Already sharply lower on the day, US stock indices fell further and the dollar rose as investors panicked on the back of headlines quoting Janet Yellen that interest rates may have to rise to stop the economy overheating. The Nasdaq fell nearly 400 points and other indices also slumped, while gold and silver reversed sharply off their earlier highs as the dollar extended its advance.

Yellen's remarks intensified investor worries about the prospects of the Fed tightening its monetary policy sooner than expected, after the FOMC member Kaplan had last week also suggested that the central bank should start talking about tapering bond buying soon - contrary to what Chairman Powell had said earlier in the week.

5.29pm BST

And here's Bloomberg's take on Janet Yellen's comments:

Treasury Secretary Janet Yellen said interest rates may have to rise modestly to prevent the U.S. economy from overheating due to higher levels of government spending, without specifying a timeframe.

It may be that interest rates will have to rise somewhat to make sure our economy doesn't overheat," Yellen said in an interview with the Atlantic recorded Monday that was broadcast on the web on Tuesday. It could cause some very modest increases in interest rates."

5.17pm BST

Reuters have now published Janet Yellen's comments about the need for US interest rates to rise modestly - which added fuel to today's stock market falls.

Yellen also defended Joe Biden's stimulus plans, insisting they will help reduce US inequality.

U.S. interest rates may need to rise to prevent the economy from overheating as more of U.S. President Joe Biden's economic investment programs come on line, U.S. Treasury Secretary Janet Yellen suggested in remarks released Tuesday.

It may be that interest rates will have to rise somewhat to make sure that our economy doesn't overheat, even though the additional spending is relatively small relative to the size of the economy," she said in taped remarks to a virtual event put on by The Atlantic.

Sell in May in full force this afternoon, #ftse100 after a decent start now down 130 points from the high of the session. Germany's DAX 400 points below the high and #nasdaq down 2.5%.

4.57pm BST

Germany's DAX stock index has suffered its biggest fall this year.

Chip shortages have caused car production lines around the world to shudder to a halt, with the industry at the back of the queue behind tech firms and games console manufacturers after reducing orders at the start of the pandemic.

The issue has been put under renewed scrutiny in the last 24 hours, first by Intel chief Pat Gelsinger stating the shortages would persist for a couple of years', and then by German firm Infineon stating that production would lag by 1 million units in Q2.

4.45pm BST

Britain's FTSE 100 index has closed down 0.67%, as its early rally well and truly fizzled out.

After a late selloff, triggered by Wall Street's slide and then those comments from Janet Yellen, the Footsie shed 46 points to end at 6923 points, the blue-chip index's lowest close in over a week.

4.36pm BST

The US dollar got a lift from Janet Yellen's comments:

Looks like the $DXY jumped on Yellen's comments pic.twitter.com/Q7expUpwUa

4.28pm BST

S&P 500 dipped .3% in the minutes after this Yellen headline crossed @TheTerminal

*YELLEN SAYS RATES MAY HAVE TO RISE TO STOP ECONOMY OVERHEATING pic.twitter.com/rNHTv3KJmn

4.26pm BST

A flurry of headlines from US treasury secretary Janet Yellen just hit the wires.... and knocked shares further into the red:

Treasury Secretary Yellen says rates may have to rise somewhat to keep economy from overheating https://t.co/rmKMAZJL8w

Sec. Yellen at @TheAtlantic: "It may be that interest rates will have to rise somewhat to make sure that our economy doesn't overheat, even though the additional spending is relatively small relative to the size of the economy."

.@SecYellen on whether GOP tax cuts in 2017 generated growth:

The truth is that isn't what happened. What happened is stock buybacks and dividends surged. Workers didn't see any significant increase in their wages. And there was no burst of investment."

.@SecYellen also argues that raising (or cutting!) taxes has smaller impact on capital than it used to:

"Raising taxes mainly hits the extraordinary return to capital, which seems to have very little impact on investment."

Stock selloff picks up after Treasury Sec Janet Yellen told the The Atlantic's Future Economy Summit that interest rates will have to rise somewhat to make sure the economy doesn't over heat. #DOW -311 #NASDAQ -367

4.08pm BST

Germany's DAX is falling deeper into the red too, now down over 2% today, as worries over semiconductor shortages grow.

Nearly every stock on the DAX is down, with chipmaker Infineon (-5.6%) now the top faller.

German semiconductor manufacturer Infineon Technologies AG said about 2.5 million cars won't be produced in the first half of 2021 due to ongoing supply chain shortages.

Infineon is a major supplier to automakers, who have been struggling to obtain chips after cutting back orders due to the pandemic. Now, with demand for both consumer-electronics companies and cars roaring back, companies like Infineon are ramping up supply.

German chipmaker Infineon warns of continued bottlenecks in a manufacturing supply chain that's running at "full speed" https://t.co/mhgzaYpgFl

3.43pm BST

This heat map' of the S&P 500 index shows how the huge tech companies are pulling the market down.

Heat map of the S&P 500's early performance so far today (3-5min delayed)

CLOSE THE NASDAQ!!

(Source https://t.co/eb7IrY15Vo) pic.twitter.com/k2ixs0RvwT

3.42pm BST

The tech selloff has pulled London's stock market into the red too.

The FTSE 100 index is now down 0.2%, or 13 points, at 6957 points in lateish trading.

3.25pm BST

Just in: US factory orders jumped by 1.1% in March, underlining how the American economy is strengthening.

That's up from a 0.5% fall in February, and means that new orders for manufactured goods have risen for 10 of the last 11 months.

Factory Orders at multi year high (ignoring the Boeing spike in 2014). pic.twitter.com/qtw9c5jFSO

3.18pm BST

The Nasdaq is down 2%.

The latest on today's stock volatility https://t.co/pmYDzZUiwa pic.twitter.com/MZyce4vTfL

Nasdaq down a quick 4% from its open last Thursday (4/29). $QQQ

3.09pm BST

Worst day for Nasdaq since 18 Mar, if we close here https://t.co/sVyL3b6alF

3.02pm BST

In New York, stocks have opened lower - with tech companies leading the fallers as the Nasdaq slides 2%.

What's striking is that several of these growth names have taken a sharp hit even after reporting promising results, which highlights just how inflated the market's expectations were going into this earnings season.

U.S. stock indexes opened lower Tuesday, a day after the S&P 500 index and the Dow Jones Industrial Average put in a strong start to May, pushing the equity benchmarks near records. https://t.co/2jWWrMpvth pic.twitter.com/fUfPScbHx5

2.29pm BST

This Bloomberg chart show how the US trade deficit hit a record in March (see earlier post for details).

The U.S. March trade deficit was the widest monthly gap in the history of data going back to 1992, via @mckonomy pic.twitter.com/jMiCAF9VGF

2.12pm BST

European stock markets took a sudden lurch downwards this lunchtime -- triggering talk that there may have been a micro flash-crash'.

This chart shows how the Stoxx 600 index of European shares suddenly slid into the red, around 12.40pm UK time.

U.S. and European stock markets saw a sudden 0.5% drop in hefty volumes around 1130 GMT on Tuesday, leaving traders scratching their heads and one calling it a micro flash-crash".

Nasdaq stock futures fell 0.5% in four minutes while the S&P 500 e-mini futures fell 0.4%. They later added more losses to trade 0.9% and 0.6% lower respectively.

Stock markets fall 0.5% in minutes, leaving traders perplexed $SPY https://t.co/dAmfesOi6y pic.twitter.com/641mooUEek

1.48pm BST

The US trade deficit with the rest of the world has widened to a new record, as America's economy strengthens thanks to vaccine rollouts and stimulus spending.

The US goods and services deficit surged to $74.4bn in March, up $3.9bn from the $70.5bn recorded in February,.

The US trade deficit worsened for the fourth consecutive month, reaching $74.4 billion in March, $400 million wider than Econoday's consensus. pic.twitter.com/uOBa4l0nPC

New month, new record! The US Trade #deficit hit USD 74.4 billion in March. pic.twitter.com/siHGByKwWp

ECONOMY WATCH: The US trade deficit rose 5.6% to a record $74.4 billion in March. The trade gap has soared in part because stimulus checks and a fast recovering U.S. economy have boosted demand for imports. Deficits will remain very high for some time to come.

1.18pm BST

Back in the markets... the FTSE 100 has dropped back below the 7,000 point mark, as European stocks take a dip.

The FTSE is still up around 0.2%, lifted by energy stocks and holiday companies, thanks to the higher oil price and hopes that travel restrictions will be eased soon.

Rotation out of megacaps drags Nasdaq futures lower https://t.co/azIxZSAIVs pic.twitter.com/vqTjv3mreG

12.57pm BST

Mortgage borrowing in the UK has reached its highest level since modern records began as buyers rushed to beat the now-extended stamp duty holiday deadline, my colleague Larry Elliott writes.

Bank of England figures showed that Rishi Sunak's decision in the budget to extend the tax break until June did not stop a burst of activity in the housing market in March.

Although the number of new mortgage approvals dropped from 87,000 to 83,000 in March, they remained higher than the 73,000 recorded in February 2020, the last month before the UK went into its first pandemic-induced lockdown.

12.46pm BST

From vaccines to music... where more artists have joined the trend of selling the rights to their tunes to investors.

My colleague Mark Sweney explains:

Red Hot Chili Peppers and Kid Creole and the Coconuts have become the latest artists to cash in on their catalogue of hits, selling the rights to songs including Californication and Annie I'm Not Your Daddy to London-listed music royalties investment firms.

The Chili Peppers are poised to sell their publishing rights to London-listed music investment firm Hipgnosis, reportedly for more than $140m (101m).

12.30pm BST

Pfizer has raised its annual sales forecast for its COVID-19 vaccine, as the vaccination programme accelerates.

The U.S. drugmaker now expects sales of $26 billion in 2021 from the vaccine, which it co-developed with Germany's BioNTech. That's sharply up from its prior forecast of about $15 billion.

Earnings #breaking
-Pfizer Q1 results
-EPS 93 cents beating est. for 78 cents
-Revenue $14.6bln beating est. for $13.67bln
-Sees FY COVID revenue about $26bln
-Sees FY adjusted EPS $3.55-3.65, saw $3.10 to $3.20
-Shares higher pre-markethttps://t.co/1P7pcWU4U3 pic.twitter.com/zDGPNYI26C

I am extremely proud of the way we have begun 2021, delivering strong financial results in the first quarter. Even excluding the growth provided from BNT162b2, our revenues grew 8% operationally, which aligns with our stated goal of delivering at least a 6% compound annual growth rate through 2025.

In addition, we have achieved important clinical, regulatory and commercial milestones across our pipeline and portfolio while also continuing to increase our capacity to supply urgently-needed doses of BNT162b2 to the world. Each of these accomplishments further demonstrates our commitment to Pfizer's purpose: Breakthroughs that change patients' lives."

12.02pm BST

Shopper numbers in the UK fell by 2% last week, as April showers and blustery wind deterred some people from visiting the high street.

11.35am BST

Jewellery giant Pandora has made a significant move today, by announcing it will no longer use mined diamonds.

We can essentially create the same outcome as nature has created, but at a very, very different price."

We talked a good game, but we didn't deliver on it. I want to end my life with clean hands. I was so conflicted in so many ways and I'd like to do something constructive for the world."

Ethical concerns could not be more of a priority for consumers as we move out of lockdown, making this a shrewd move for a company that had already committed to manufacturing all of its materials from recycled gold and silver by 2025.

It will be interesting to see how the company matches this commitment to efficient supply chain processes that ensure demand is met as we move into the next phase of ethically driven jewellery."

11.07am BST

The oil price has jumped, amid expectations of strong demand as Western economies reopen.

Brent crude, the international benchmark, is up almost 2% at $68.90 per barrel, a rise of $1.3 per barrel today. That lifts it towards March's highs (when oil was the highest since January 2020).

Crude #oil prices are attempting to stage a recovery after dropping over 2% on Friday amid fears of weaker demand for oil products in #India. pic.twitter.com/Ae6OVZDVEk

The current strength is led by U.S. gasoline where demand is seen healthy as more motorists take on the roads,"

Yesterday's stock market strength is being followed through this morning in the oil market...the market focuses on the successful roll-out of vaccine programmes in the U.S. and in other developed countries and not on the devastation in India and Brazil."

10.43am BST

Rishi Sunak's extension to the stamp duty holiday early in March boosted mortgage demand to record levels, agrees Nitesh Patel, strategic economist at Yorkshire Building Society.

The announcement early in the month that the current Stamp Duty was to be extended from March to the end of June is likely to have fuelled demand, with buyers and sellers rushing to complete sales before the deadline.

Despite rising prices and uncertainty, housing demand remains strong, though there is some unevenness in the market, with larger, detached residences boasting outside space proving more popular than flats as people reassess their needs following a year of lockdowns. The housing market has also benefitted from the fact that home purchasers are typically from higher income groups but jobs losses have mostly been concentrated in the lower-paid occupations such as in the hospitality sector, which has been hit with a cruel blow by Covid-19.

Overall, these figures provide another reason to think that consumer spending was starting to gather some momentum in March. And with consumers in position to power the recovery, this should mark the start of a rapid recovery that will push GDP back to its pre-crisis level in early 2022.

While net borrowing was at the highest level since the series began, it is interesting to see that approvals for house purchase were lower. This may be down to the extension of the stamp duty holiday, which removed the immediate pressure in terms of getting deals done.

The high level of credit repayments show that borrowers are wisely using their money during lockdown and putting it to good use in repaying debt.

10.33am BST

UK consumers also kept paying off their credit cards in March.

The Bank of England reports that consumer credit fell by around 500m in March, including net repayments on credit cards (0.4 billion) and other forms of consumer credit (0.2 billion).

10.15am BST

In the housing sector...UK mortgage lending has jumped at the fastest on record, going back to the early 1990s.

New data from the Bank of England shows that net mortgage borrowing was 11.8 billion in March, the strongest monthly rise since its data series began in April 1993.

Mortgage borrowing was very strong in March with individuals borrowing an additional 11.8 billion secured on their homes.

This was the strongest net borrowing on record since the series began in April 1993, with the previous peak in October 2006 (10.4 billion). The strength in net lending reflected gross lending also reaching a new series high in March (35.6 billion).

10.03am BST

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, says ongoing trade disruption following the UK-EU free trade deal, and the blockage in the Suez Canal in late March, both caused problems in UK supply chains last month.

The manufacturing sector was flooded with optimism in April as the PMI rose to its highest level since July 1994, bolstered by strong levels of new orders and the end of lockdown restrictions opened the gates to business. It was primarily the home market that fuelled this upsurge in activity though more work from the US, Europe and China demonstrated there were also improvements in the global economy. This boom largely benefited corporates as output growth at small-scale producers continued to lag behind.

As businesses raced to meet the need for increased capacity, the lost jobs of 2020 returned in greater numbers and employment creation continued in earnest at similar levels to last month and at a pace rarely surpassed in the survey history.

However, the still significant delays in the delivery of goods due to the pandemic, Brexit and the Suez blockage in some sectors hampered further progress on two counts.

The slow delivery of goods motivated supply chain managers to increase their order numbers and try to build up recently unravelled stocks leading to further hold-ups, and the injection of more inflationary pressures into the economy.

Price rises were amongst the highest in the last three decades and shortages in some essential materials intensified. This in turn lead to customers paying more and at a rate not seen since records began in late-1999.

This is likely to filter down to consumers before too long."

9.50am BST

This chart shows how UK factories are facing longer delivery times, and a surge in raw materials costs.

9.44am BST

British factories face a growing battle to get hold of raw materials and parts, as activity rebounds from the shock of the pandemic.

That's according to data firm Markit's latest UK manufacturing PMI, just released, which has jumped to 60.9 in April. That's up from March's 58.9, showing that activity accelerated last month.

Impressive news on the #UK #manufacturing sector from the purchasing managers that bodes well for Q2 growth even allowing for fact the survey can overstate developments in #economy at times of major change. Manufacturing #PMI up to 321-high of 60.9 in April from 58.9 in March

Manufacturing production increased for the eleventh successive month in April.

Output growth was attributed to a loosening of lockdown restrictions, improved demand and rising backlogs of work. Solid and accelerated expansions of output were seen across the consumer, intermediate and investment goods industries, with the consumer goods category the strongest performer overall.

The sector remained beset by supply-chain delays and input shortages, however, which contributed to increased purchasing costs and record selling price inflation.

9.24am BST

Advertising magnate Sir Martin Sorrell is also upbeat about growth prospects.

His digitally-focused S4 Capital hiked its revenue and profit forecasts this morning, calculating that demand will be driven by the economic recovery and stimulus spending.

9.07am BST

Jobs news: India's software giant Infosys says it is hiring 1,000 staff in the UK to meet a digital growth surge.

Infosys says many will be new graduates, from leading colleges and universities in the UK". That could be welcome news for some of the students whose education has been disrupted by the pandemic.

While the talent gap has been looming, the events of the past year have exacerbated the need for vital digital skills as businesses have rapidly accelerated their digital transformation.

Bridging the digital divide and making quality digital education accessible to every citizen are vital to the establishment of a robust future workforce, and the UK's economic recovery.

The agreement between Johnson and Modi includes an enhanced trade partnership, which is not as deep and comprehensive as free trade deals with some other countries such as the EU and Japan. It will lower non-tariff barriers on fruit and medical devices, with the expectation that this will allow British businesses to export more of their products to India.

The deal includes lifting restrictions to enable fruit producers across the UK to export British apples, pears and quince to India for the first time - although fruit exports are a relatively minor part of the UK economy, at just 1.3bn in 2020 to the whole world, out of total of 310.1bn.

8.50am BST

Hospitality bosses didn't have a great bank holiday. Not only was the weather rather grim at times, but they also lost a legal bid to force the government to reopen indoor dining in England faster.

The High Court ruled in favour of the government after a case was brought by Punch Taverns founder Hugh Osmond, and Sacha Lord, the night-time economy adviser for Greater Manchester.

There are thousands of bars, pubs and restaurants across the country which are still closed and whose owners and employees are struggling financially due to these unfair restrictions.

For the 40% minority who do have outdoor space, this weekend's weather has only exacerbated the ongoing struggles the industry has continually faced, and I've heard of countless pubs that have been forced to close early or who have had zero customers due to the bad weather. Not only does this severely impact on business and sector recovery, but on the staff whose wages, and ability to pay rent, food and bills, are at the mercy of something as unpredictable as the weather."

The High Court have ruled in favour of the Gov't.

They stalled, delayed and refused to mediate.

The Judge agreed the clock had run down.

The Gov't FAILED to disclose a SAGE report, confirming that during the whole pandemic, only 226 cases were associated to Hospitality. pic.twitter.com/bQlRquPCW5

8.40am BST

Sports Direct owner Frasers Group is also in the risers, up almost 2%, after announcing a new 60m share buyback programme.

The purpose of the programme, which starts today is to reduce the share capital of the Company", it says.

Documents filed at the high court reveal that Sports Direct, since renamed Frasers Group, came under scrutiny in Ireland, France and Finland, over an arrangement that involved it paying VAT in the UK on all of its sales to customers overseas over a seven-year period.

The plan involved setting up a separate company called Barlin Delivery, which had no drivers or trucks and was run by Ashley's computer scientist brother John, to deliver orders abroad.

8.24am BST

In the City, the blue-chip FTSE 100 index has jumped around 0.85% in early trading, with travel companies among the risers.

The FTSE 100 gained around 60 points at the open to reach 7030 points, as traders returned to their desks after the Bank Holiday weekend. That's close to the pandemic highs hit last month.

With most major economies in the midst of a slow grind towards normality, markets continue to search for beneficiaries of the recovery.

In the US, there is further evidence of the reopening" trade, with investors anticipating stocks and sectors likely to benefit from the return to some kind of normality. This in turn has applied some pressure on tech stocks, despite their largely upbeat earnings numbers, where valuations are coming under increasing scrutiny as the scale of their recent pandemic success comes into question as lockdowns subside.

7.48am BST

German carmakers are also being hit by supply problems - particularly for semiconductors.

The IFO institute reports that conditions improved across Germany's Automotive Industry, sending its gauge of business conditions to a two-year high.

Carmakers have now overcome the slump they suffered due to the coronavirus"

At the moment, the main issue is problems with intermediate products, which were reported by 60.4 percent of the companies.

That figure compares to only 5.8 percent in July 2020; back in April 2020, it was as high as 42.0 percent. Several automotive plants have now announced they will introduce short-time work due to the shortage in silicon chips.

7.42am BST

Overnight, lumber prices hit a new record high, highlighting the squeeze on raw materials.

The spiraling demand for lumber - notably in the US - means a hefty bill for new home builders (as most new-build homes in America are wood framed). Ditto for those extending their homes, or even doing DIY jobs .

They are feasting on a glut of cheap pine trees in the U.S. South while their finished products like lumber and plywood are flying off hardware-store shelves and being bid up by home builders.

Lumber futures delivery later this month ended Monday at $1,575.60 per thousand board feet, a record and more than four times the typical price this time of year. Futures rose by the daily maximum allowed by the Chicago Mercantile Exchange during nine of April's 21 trading sessions.

The price of Lumber closed at another all-time high, more than quadrupling over the last year. pic.twitter.com/GDXqp2fB8c

US Inflation Expectations hit 2.6%, their highest level since 2008. pic.twitter.com/yeVKsKqwXf

7.36am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

US ISM Manufacturing declined to 60.7 in Apr/21 from 64.7 in Mar.
Decline is attributable mainly to supply constraints, as indicated by sharp increase in price paid and a decline in inventory levels and suppliers' delivery. pic.twitter.com/fYnTxxGmRZ

[Purchasing managers] reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus impacts limiting availability of parts and material."

What really stands out in the April report is just how broad the squeeze in supply of key commodities and intermediate inputs has become, with respondents' comments suggesting supply shortages are affecting almost every industry.

That is reflected in the supplier deliveries time balance which, though it fell to 75.0 last month from 76.6, remains unusually elevated."

The Baltic Dry Index, once widely seen as a proxy for global growth and #commodity demand, has risen more than 650% from its #Covid low to the highest level in almost 11 years! pic.twitter.com/fcE9wLtRvP

Commodities prices jumped to new highs amid oil-demand optimism. #OOTT #METL https://t.co/1vUJrlhFqW

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