Inflation threat and ECB dilemma – major market concerns 

The covid-19 pandemic hit the global economy hard. While the situation is much better now than it was several months ago, there are still many obstacles to overcome until the economy rebounds to the past levels.  Currently, inflation is one of the significant threats to recovery. Investors are waiting for Thursday’s U.S. consumer price data to gauge the situation. They are worried that rising inflation could push the Federal Reserve to begin reducing stimulus flow.

Last month, inflation data came much higher than expected, sparking the sell-off on the market. Friday’s jobs report showed that jobs growth picked up from the previous month and wage growth accelerated, as well. Some analysts think this data indicates that higher inflation may persist rather than being transitory, as the Fed currently assures the people.

The next Fed meeting is scheduled on June 15-16, and the inflation reading is one of the last major pieces of economic data ahead of it.

The ECB is also planning to meet on Thursday. It will release its updated growth forecasts for 2021 and 2022, as well. Policymakers will discuss whether to prolong their support for the eurozone recovery through emergency stimulus.

Angel Talavera, head of Europe economics at Oxford Economics, noted that with the recovery gathering speed, the ECB is walking a fine line between starting to unwind some of the emergency support measures and preserving favorable financial conditions.

Meanwhile, the Meme stock frenzy continues on the market

AMC shares skyrocketed by more than 80% last week despite tumbling down by more than 6% on Friday. The stock has been at the center of a fresh wave of buying by retail investors and traders. They hyped the stock in forums.

AMC was on the brink of bankruptcy not long ago. However, it completed its second share offering in three days on Thursday, cashing in on an almost 400% surge in its share price since mid-May.

However, most experts say that the scale of the rally is out of line with the stock’s fundamentals, and high valuations on the meme stock names likely won’t last.