Prosperity Investment Management provides you with a weekly update from markets across the globe.
Starting in the UK, the Bank of England’s policymakers voted unanimously to keep the benchmark interest rate at an all-time low of 0.1% and to continue its existing bond-buying program. The central bank said that global economic developments “had been a little stronger than anticipated” last month and noted that the U.S. fiscal stimulus package should provide “significant additional support.”
In the US, the week began on a strong note - attributed to a combination of fiscal and monetary policy stimulus, more retail investor support and the better economic outlook given progress in containing the spread of coronavirus. On Thursday, President Joe Biden announced that the U.S. would reach 100 million coronavirus vaccinations by the next day, well ahead of earlier targets, and was even preparing to lend doses to Canada and Mexico.
Chinese stocks fell for the week, with the Shanghai Composite Index slipping 1.4% and the large-cap CSI 300 Index shedding 2.7%. Chinese stocks underperformed other Asian markets on Friday after negative headlines about the first day’s talks at the U.S.-China meeting in Alaska, with each side criticising the other.
Prosperity Investment Management provides you with a weekly update from markets across the globe.
In the UK, economic output shrank 2.9% sequentially in January due to a sharp slowdown in the services sector, official data showed. Economists in a Reuters survey had forecast a 4.9% contraction, likely reflecting the new lockdown measures instituted at the start of the year. Exports of UK goods to the EU, excluding gold and other precious metals, fell 40.7% from the preceding month. UK imports from the EU tumbled 28.8%.
In the US, stocks moved broadly higher for the week - lifting most of the major benchmarks to new records. Investors seemed to remain focused on fluctuating longer-term bond yields and the discount they place on future earnings, resulting in substantial swings in the technology-oriented Nasdaq Composite Index. The small-cap Russell 2000 Index outperformed and extended its recent market leadership, ending the week up roughly 19% on a price basis for the year to date.
On Thursday, China concluded its annual National People’s Congress meeting - the country’s highest profile political gathering - at which lawmakers set economic targets and other economic policy. Days after unveiling China’s 2021 GDP growth target of above 6%, Premier Li Keqiang said that the forecast could still be exceeded and was “intended only to provide guidance for further development.” Li’s comments suggested that the official growth target leaves scope for flexibility as China’s economy is in the process of normalising.
Prosperity Investment Management provides you with a weekly update from markets across the globe.
In his budget speech to Parliament, UK Chancellor Rishi Sunak pledged £65bn of additional fiscal spending in the short term and a temporary tax break for business investment but most individuals will have to pay more tax over time and corporation tax will rise from 19% currently to 25% in 2023.
In the US, the major benchmarks finished mixed as longer-term interest rates continued their ascent. The rise in rates again weighed on growth stocks by increasing the discount on future earnings, while value stocks managed gains, according to Russell indexes. Within the S&P 500 Index, energy shares outperformed as oil prices hit their highest levels in over a year. Technology shares were broadly weak, while consumer discretionary stocks continued to be dragged lower by electric vehicle maker Tesla.
In Asia, according to purchasing managers’ index (PMI) data, the Japanese manufacturing sector grew in February for the first time in close to two years, with domestic manufacturers gradually recovering from the impact of the coronavirus pandemic.
Prosperity Investment Management provides you with a weekly update from markets across the globe.
In the US, Tuesday saw Joe Biden declare that he expected the nation to have access to a COVID-19 vaccine by the summer with a view to normal life across the country by December. The latest vaccine reports, however, showed less effectiveness against different strains of the virus whilst doubt circled as it was revealed that US soldiers were declining the jab over its long term health effects. American markets did experience intra-day records before pulling back slightly later in the week. However, they once again continue to flirt with all time highs.
UK Prime Minister Boris Johnson set out his plans to reopen the economy earlier this evening, June was touted, at the earliest.
Similar stories came out of Switzerland, with public space, museums and other areas planning a welcomed return soon. The FTSE 100 in particular continues to trade at an attractive discount compared to pre-COVID levels.
China has laid out a clear plan to reduce restrictions and bring the superpower back to conventional economic activity. Travel showed 71% down during January though, demonstrating the regime’s tentativeness to rush a return to pre-pandemic activity too quickly.
Prosperity Investment Management provides you with a weekly update from markets across the globe.
American markets had a promising week again as many of the world’s significant economies reporting a decline in pandemic cases. Similar gains were seen to the week before as we once again saw all-time highs. Weekly jobless data came in lower along with inflation data (CPI).
In Europe, indices continued to post positive results across the board. This was despite the fact countries such as Germany declared new lockdown measures. Results also showed that the UK economy shrunk by 9.9% last year, a record not seen for over 300 years.
Asia continued to enjoy 2021 performance before embarking on Lunar New Year festivities this weekend.
And finally we saw change in Mexico. The nation’s overnight interbank interest rate was cut to 4%, a controversial move that surprised many but deemed necessary given the trading environment.
Prosperity Investment Management provides you with a weekly update from markets across the globe.
US markets benefitted from a bounce as investors anticipated Joe Biden’s stimulus package and further distribution of vaccinations across the globe. In keeping with late 2020, several indices reached all-time highs with the oil sector benefitting from a rise in oil prices.
European markets also marched forward. The continent clearly benefitting from various vaccination programs, with Poland announcing it’s intent to reopen it’s economy within the near future. Most European markets saw gains including that of Italy, where Mario Draghi (former Head of ECB) began his tenure in the Italian office.
Finally, in Asia the highlight was in Hong Kong, as investors poured $5.4 billion into the IPO of Kuaishou Technology, resulting in the largest internet IPO since Uber (2019).
Prosperity Investment Management provides you with a weekly update from markets across the globe.
Markets in the US suffered from losses last week with certain indices seeing their worst day since October 2020. Without doubt, most of the trading activity and headlines revolved around retail investors pouring into GameStop, the video game retailer. Reddit message boards revealed that high-profile hedge fund firms were taking large short investment positions including that into GameStop. Taking a short position is effectively betting against the success of a company and speculating on its failure. It sparked a reaction amongst retail investors as they sought to go up against Wall Street firms in an unprecedented market event, buying up GameStop shares which raised the share price, costing professional investors billions of US dollars.
European markets similarly faced a decline. Concerns continue to rise over the distribution of COVID-19 vaccines and the slowing down of economies due to prolonged lockdown measures. Both Pfizer and AstraZeneca declared a shortfall in supplies of their recently approved vaccinations.
Similar market sentiment also occurred in China. The Shanghai Composite incurred losses though contrastingly, Hong Kong’s Hang Seng posted close to 20-month highs due to its Stock Connect program.
Prosperity Investment Management provides you with a weekly update from markets across the globe.
US markets continued to rise assisted by the better than expected figures released by Netflix. Positive gains for Facebook and Alphabet (Google) proved the tech-charge in financial markets has by no means subsided. Clearly, markets also responded well to hopes of the $1.9trn stimulus package introduced by Joe Biden.
European trading was slightly more subdued with the FTSE particularly flat. Fears over lockdown rules and their continued presence have halted recent growth in the UK index.
Asia was once again boosted by China. Though 22 million people have been placed under lockdown, the nation is benefitting from lower infection rates than other countries. However, news that confirmed 2.3% growth in China’s economy in 2020 is sure to please many. The powerhouse has emerged from the lockdown stronger than prior to being affected by COVID-19.