“Global Renewable Energy…”

Renewable energy grew at its fastest pace in the last two decades, 2020 was led by China and shall continue to grow in the next two years, showed a report by the International Energy Agency (IEA) on Tuesday.  New renewable energy capacity in 2020 rose by 45% to 280 gigawatts (GW) last year, the largest year-on-year increase since 1999 irrespective of supply chain disruptions and construction delays due to the impact of COVID-19. The report further said that China accounted for 50% of renewable energy capacity growth last year and will account for 45% this year and 58% in 2022.   In a renewable energy market outlook, the IEA said that globally around 270 GW of new capacity is forecast to be added this year and nearly 280 GW in 2022.  Governments auctioned 75 GW of offshore and onshore wind, solar photovoltaic and bioenergy capacity last year, which is up by 20% from 2019.  IEA executive director Fatih Birol said that “last year the increase in renewable capacity accounted for 90% of the entire global power sector’s expansion.”  He further added that governments need to set policies to encourage more investment in solar and wind and the additional grid infrastructure they will require, as well as other renewable technologies such as bioenergy and geothermal.

UK Economy

Britian’s economy grew by a stronger 2.1% in March from February.   This is a sharp bounce back this year after the deep slump in 2020 caused by the coronavirus, showed official data on Wednesday.  The retail sector, the reopening of schools and the construction sector were the main contributors for growth.  In the first three months of 2021, when the country was under a third lockdown, Gross Domestic Product shrank by 1.5%, declared the Office for National Statistics in line with the Bank of England’s forecast.  Last week, the BoE said that it expected the UK economy to recover quickly amid the lifting of the coronavirus restrictions and result to an approximate growth of 7.25% in 2021. ONS data showed that Britain’s dominant services industry grew by 1.9% in March from February, its strongest growth since last August, while manufacturing and construction also grew stronger than analysts expected. Meanwhile, separate trade figures showed Britain imported more goods from non-EU countries than EU countries during the first quarter for the first time since records started in 1997.  The ONS warned that it was too soon to say if this was the beginning of a trend or just short-term disruption.

German Investor Morale

Investor sentiment in Germany surged in May as the third wave of COVID-19 pandemic eased, showed a survey on Tuesday, pointing to a significant upswing in Europe’s largest economy in the coming six months.  The ZEW economic research institute said its survey of investor’s economic sentiment rose to 84.4 points from 70.7 in the previous month.  Health Minister Jens Spahn said last Friday that the third wave of the coronavirus pandemic appeared to be broken in Germany.

Germany launches 30-year green Bond

Germany received €27 billion of demand on Tuesday for a 30-year bond.  The country added to  longer dated debt to an issuance programme backing environmental-friendly spending, as Euro area bond yields rose sharply before Wednesday’s US inflation reading.  The 30-year bond is Germany’s first such issuance of the year, extending the country’s green yield curve following an inaugural 10-year green bond last September and a 5-year in November.  Instead of focusing on a single maturity for green issuance like other European governments, Germany is building a yield curve which investors hope will act as a reference point to other borrowers.  Green bonds usually trade with a lower yield or a price premium when compared to conventional bonds as dedicated funds chase a limited available supply.  Germany issued €11.5 billion of green bonds last year and expects to issue a similar amount this year. 

US Job Openings

US job openings hit a record high in March with evidence showing that a shortage of workers was hampering job growth, even though 10 million Americans are looking for employment.  The Labour Department’s monthly Job Openings and Labour Turnover Survey (JOLTS) report also showed layoffs dropping to a record low in March.  Job openings that measure the demand for labour jumped 597,000 to 8.1 million on the last day of March, the highest since the beginning of December 2000. 

US Consumer Prices Surge in April

US Consumer prices increased by the most in nearly 12 years amid booming demand from the reopening of the economy pushing against supply constraints which could fuel fears of a lengthy period of higher inflation.  The report from the Labour Department on Wednesday also showed a strong build-up of underlying price pressures.  Demand is being driven by nearly $6 trillion in government relief since the beginning of the COVID-19 pandemic started in the US in March 2020 and the vaccination roll-out.  The Labour Department said on Wednesday, that the Consumer Price Index jumped 0.8% last month after rising 0.6% in March.  Food prices increased 0.4%.  The cost of food consumed at home also gained 0.4% while the cost of food consumed away from home rose 0.3%.  Gasoline prices dropped 1.4% after accelerating 9.1% in March.  In the last 12 months through April, the CPI shot up 4.2%.  That was the largest gain since September 2008 and followed a 2.6% increase in March.  Excluding the volatile food and energy components, the CPI soared 0.9%, the largest gain since April 1982.  The so-called core CPI rose 0.3% in March.  There were increases in prices for used cars and trucks, shelter, airlines fares, recreation, motor vehicle insurance as well as household furnishings.  In the last 12 months through April, the core CPI jumped 3% after increasing 1.6% in March.    

US Weekly Jobless claims

Fewer Americans filed new claims for unemployment benefits last week, as companies held on to their workers amid the growing labour shortage.  Initial claims for state unemployment benefits totalled a seasonally adjusted 473,000 for the week ended 8^th May compared to 507,000 the prior week, said the Labour Department on Thursday.  Although job openings are at a record 8.1 million and nearly 10 million people are officially unemployed, companies are struggling for labour.  Layoffs are at all-time lows.  The factors blaming this diversion are generous unemployment benefits, fears of catching COVID-19, parents staying home to care for children and raw material shortages. pandemic related retirements and career changes.   In another report on Thursday, the Labour Department said its producer price index (PPI) for final demand rose 0.6% in April after surging 1% in March.  In the last 12 months through April the PPI climbed to 6.2%.  This was the biggest year-on-year increase since the series was revamped in 2010 and followed a 4.2% jump in March.   

China’s direct Foreign Investment

Foreign Direct Investment (FDI) into China in the first four months of the year jumped 38.6% from the same period last year to Yuan 397.07 billion ($61.55 billion) said China’s commerce ministry. 

Market Roundup

European stocks reached record highs on Monday, with miners leading the gains after commodity prices surged, optimism about the reopening of the economies and easy monetary policy lifted sectors that benefit from a recovery.  Miners listed in London such as Rio Tinto, BHP Group and Glencore rose between 1.7% and 2.6%.  China’s benchmark Iron Ore futures and Steel futures hit  all-time highs, similarly, copper prices touched record highs on expectations of improved demand amid tightening supply.  London’s FTSE 100 dropped 0.1% impacted by a surge in the Pound as British Prime Minister Boris Johnson is set to announce the next phase of reopening from the COVID-19 lockdown.  The European travel and leisure sector declined 1.4% and highly valued technology stocks dropped 2.4%. Wall Street closed lower on Monday, as inflation jitters drove investors from growth stocks to cyclicals which stand to benefit more as the economy reopens.  Industrial and healthcare shares limited the Dow’s decline.  Meanwhile, a resurgence in demand is colliding with strained supply of basic materials, helping to fuel inflation worries.

European stocks retreated from all-time highs on Tuesday, with travel, retail and technology shares among the top losers after worries about rising US inflation that knocked back US indices.  Global sentiment soured after investors dumped Wall Street’s market-leading growth stocks on Monday, ahead of the latest reading on US consumer prices, with many fearing it will prompt the Federal Reserve to rethink its monetary policy stance.  European tech shares dropped 2.3% to their lowest in six weeks, travel and leisure stocks also slumped 4.1% as Sweden’s Evolution Gaming Group tumbled 9.1% after the bookrunner announced the pricing of block trades. The pull back in European stocks comes after a strong rally with the STOXX 600 up about 10% so far this year as a result of solid earnings and the opening of the economy saw more buying in the economically sensitive parts of the market. 

The FTSE 100 rebounded on Wednesday, supported by positive earnings updates from companies including Diageo, while stronger-than expected monthly GDP data bolstered optimism about a sharp recovery from the pandemic.  Globally stocks extended a sell-off from the previous session as investors braced for US consumer price index report.  Sentiment was boosted by the comments of the European Commission saying that the Eurozone will rebound from its COVID-19 slump better than expected and data showing Britain’s economy grew strongly than anticipated in March. 

China stocks ended lower on Thursday after the country’s latest bank lending data missed forecasts and Sino-US tensions weighed.  World stocks were moving towards their worst week of the year on Thursday, amid higher US inflation that worried bond markets, metals, crop, and cryptocurrency prices, the Dollar was the place to take refuge.  London FTSE was down 2% before lunch, bond, commodity and US futures markets were all deep red.  The MSCI World Equity Index, which includes 50 countries, fell 0.6% and was on course for its fourth straight day of losses and weekly fall of nearly 4%, which would be its worst since last October.  European stocks also dropped tracking a selloff on Wall Street.  Markets in Denmark, Finland, Norway, Sweden and Switzerland were closed for a public holiday.

Japanese shares led a rebound in Asian markets on Friday, building on the lead from investors on Wall Street taking up stocks that would benefit most from an economic recovery.  The Japan’s Nikkei jumped 1.3% whilst the MSCI’ broadest index of Aisa-Pacific shares outside Japan gained 0.6%.  The S&P 500 futures pointed to further gains of 0.3% when the market reopens following a 1.2% rally in the index on Thursday. 

Currency Roundup

The Greenback held near multi-month lows on growing concerns about price pressures whilst currencies such as the Canadian Dollar and the Aussie consolidated gains on Tuesday, amid a rally in commodity prices that boosted their appeal.  The Euro rose on Tuesday, hovering just below a 2½ month high hit in the previous session after data showed German investor sentiment surged to its highest level in May since the start of the COVID-19 pandemic. Sterling rose above $1.41 for the first time since February on Monday, due to a combination of Dollar weakness, market relief over Scottish election results, lockdown easing measures and the Bank of England raising its forecast for economic growth. 

The single currency climbed 0.35% to $1.217 holding just below the end of February high of $2.2179 on Monday.  It has gained 4% from a five-month low at the end of March.  The Euro’s gains were also bolstered by the Dollar’s weakness as investors waited for comments ahead of inflation on Wednesday.  The disappointment of the employment report announced in the previous week, triggered a widespread selloff in the greenback and surging commodity prices have raised concerns of higher inflation in the coming months, markets are of the belief that the FED will remain on hold. 

The Pound held steady above $1.41 on Wednesday and hit a new one-month high versus the Euro, holding on to recent gains ahead of a closely watched US inflation data.  

On Thursday, Sterling steadied above $1.40 against the Dollar after losing its position from near $1.41 the previous day when stronger than expected US inflation data pushed the Dollar higher.  Whilst the UK GDP figures that came above expectations helped the Pound to stay strong on Wednesday, it lost ground after the US data showed that consumer prices increased in April by the most in nearly 12 years.  This pushed the Dollar higher as investors turn more cautious.  Meanwhile, bets that Britain’s rapid vaccination rollout will lead to a quicker economic rebound has helped the Pound’s gains this year.  The currency has also benefited from the BoE’s move to taper its bond purchasing programme last week, amid the improving economic outlook. 

Cryptocurrency Ethereum

Cryptocurrency Ethereum reached a new peak for a third straight day on Monday, amid continued optimism about further growth in decentralised finance (DeFi).  Ethereum has soared this year, fuelled by the boom in DeFi which are platforms that facilitate crypto-denominated lending outside traditional banking. Many DeFi applications are embedded in the Ethereum blockchain.  Ethereum, the second-largest coin by market capitalisation, hit an all-time high of $4,200 and was last up around 5.2% at $4,133.40.  Bitcoin, the largest cryptocurrency, rose to a three-week high above $59,600 on Monday. Dogecoin a recent outperformer, however dropped sharply and was last down 10% at 48.2% according to CoinGecko.com.  The currency has been impacted by Tesla Inc when chief Elon Musk has called it a “hustle.”  Smaller cyrotocurrencies, like Dogecoin, known as “altcoins” have been in demand in the past few weeks, pushing Bitcoin’s share of the overall $2.5 trillion digital currency market value to its lowest in around two years.  Cryptocurrency Ether hit a record high on Wednesday, taking gains this year to almost 500% on the back of a growing interest in decentralised finance applications and increasing institutional interest in cryptocurrencies. Ether climbed to $4,372.35, higher than its previous record hit on Monday.  Bitcoin regained some of the losses sustained after Elon Musk said that Tesla would stop accepting the digital tokens as payment for its cars and traded at close to $50,000 on Thursday. Musk has faced pressure about the environmental impact of Bitcoin.  At current rates, Bitcoin mining consumes about the same amount of energy annually as the Netherlands did in 2019, data from the University of Cambridge and the International Energy Agency showed.  

Gold

Gold prices dropped on Wednesday, weighed down by a firmer Dollar and US Treasury yields ahead of the US consumer price data.   Spot Gold was down 0.1% to $1,834.46 an ounce whilst US Gold futures fell 0.1% to $1,835.10.  Higher inflation would likely add pressure on the FED to bring forward rate rises, and weigh on Gold, which bears no interest.   Some investors’ view Gold as a hedge against inflation that could follow stimulus measures, but higher Treasury yields have weighed on Gold’s appeal this year.  Thursday saw Gold edging up on hopes that the US FED would not raise interest rates anytime soon. Spot Gold was up 0.3% at $1,821.02 per ounce after dropping more than 1% in the previous session.  US Gold futures eased 0.1% to $1,821.6. 

Oil

The biggest US gasoline pipeline will not resume full operations for several more days due to a ransomware cyberattack blamed on a criminal network called DarkSide.  The FBI attributed the cyberattack to DarkSide, a group believed to be based in Russia or Eastern Europe. The attack on the Colonial Pipeline which carries nearly half of the fuel consumed along the US East Cost is one of the most disruptive digital ransom schemes ever reported.   The shutdown will reduce fuel availability in the near term, pushing prices up and forcing refiners to cut production because they do not have a way to ship the gas.  According to the US Energy Information Administration (EIA) on Tuesday, US crude oil production is expected to drop by 290,000 barrels per day (bpd) in 2021 to 11.02 million bpd representing a steeper decline than its previous forecast.  The EIA said it expects US petroleum and other liquid fuel consumption to rise 1.39 million bpd to 19.51 million bpd in 2021, compared with a previous forecast for a rise of 1.32 million bpd.  Oil prices rose to an eight-week high on Wednesday, amid a drop in US crude exports, signs of a speedy economic recovery and an upbeat forecast.  Brent futures rose 1.1% to settle at $69.32 a barrel, while US West Texas Intermediate crude rose 1.2% settling at $66.08.  This was the highest close for Brent since the 11^th of March 2021 whilst for WTI since the 5^th of March 2021.  The International Energy Agency (IEA) said in its monthly report that oil demand is already outpacing supply and the shortfall is expected to widen even if Iran boosts exports. 

Malta:  Index of Industrial Production – March 2021

In March 2021, the seasonally adjusted index of industrial production increased by 2% over the previous month.  Increases were registered in the production of capital goods (3.9%), energy (2.2%) and intermediate goods (1.1%).  The production of consumer goods decreased by 0.3%. 

Meanwhile in comparison to March 2020, the working-day adjusted index of industrial production decreased by 2.9%.  This decline is the result of production decreases in energy (11.2%), intermediate goods (3.2%) and consume goods (1%).  The production of capital goods went up by 1%. 

Residential Property Transactions:  April 2021

In April 2021, the number of final deeds of sale related to residential property amounted to 1,130 representing an increase of 540 deeds in comparison to those registered a year earlier. The value of deeds totalled EUR 228.4 million, 91.6% higher than the corresponding value recorded in April 2020.  

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