Month: April 2021

Shares in Europe fell amid worries that rising coronavirus cases could slow the pace of economic recovery. These fears overshadowed strong corporate earnings. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.78% lower. Major country benchmarks also fell: Italy’s FTSE MIB declined 1.45%, Germany’s Xetra DAX Index slid 1.17%, and France’s CAC-40 Index pulled back by 0.46%. The UK’s FTSE 100 Index dropped 1.15%.

Core bond yields in the Eurozone ended the week roughly flat. Optimism about the vaccine rollout drove yields higher early in the week. This move reversed after European Central Bank President Christine Lagarde said it was too early to withdraw stimulus measures. UK gilt yields fell, tracking U.S. Treasury yields amid volatility in equity markets and the Biden administration’s proposition to raise taxes on higher-income earners.

US stocks have changed little in an up-and-down week, amid some of the lightest daily trading volumes of 2021. Small-caps performed slightly better than large-caps, and the technology-heavy Nasdaq Composite Index modestly lagged the broad market. No particular theme– such as companies that would most benefit from economic re-openings or stocks popular with individual investors– dominated the week’s activity, although semiconductor stocks were notably weak.

Stocks fell significantly in trading on Thursday on news headlines that President Joe Biden plans to propose nearly doubling the long-term capital gains tax rate for taxpayers who earn more than $1 million a year. The tax hike would be used to finance some of the measures in Biden’s American Families Plan, which could be proposed formally next week, and could include free tuition fees for community colleges, child care subsidies, and other health or education spending. Stocks recovered some of their intraday losses, as investors seemed to realize that negotiations in Congress would likely bring any final tax increase lower than Biden’s initial proposal. U.S Treasury yields modestly decreased as the Biden capital gains tax increase news supported demand for less risky assets.

Despite a brief rally on Thursday, it was a disappointing week for Japanese equity markets– weighed down by weakness across all sectors as the government enhanced its response to deal with surging coronavirus cases. The Nikkei 225 Index shed more than 650 points over the week, briefly falling below the 29,000 mark before finishing the week 2.2% lower at 29,020.63. The broader TOPIX Index also closed down. The yen weakened against the U.S. dollar, trading just below JPY 108 on Friday, while the yield of the benchmark 10-year Japanese government bond reflected the more cautious landscape, finishing the week lower at 0.069%.

In China, the large-cap CSI 300 Index advanced 3.4% for the week, while the country’s benchmark Shanghai Composite Index added 1.4%. Chinese stocks rose steadily since Monday, when mainland equity markets received inflows totalling USD 2.5 billion from Hong Kong via Stock Connect, marking the third-largest single-day inflow from Hong Kong investors. In the bond market, the yield on China’s sovereign 10-year bond increased one basis point to 3.18%.

Copper starred in commodity markets last week as a weaker US dollar increased demand and improved market fundamentals. Copper topped $4.33 a pound– the highest it has been since August 2011 and moving past the previous nine-year plus high hit in early March around $4.29 a pound. That left copper up 4% for the week and more than 23% for the year to date. A year ago, it was down around $2.17 a pound (March 22) in the midst of the first pandemic lockdown.

Gold prices ended Friday down 0.1% at $1,777.80 an ounce for a loss for the week of 0.03%. Silver settled at $US26.075 for a tiny gain for the week of 0.04%. Oil fell on Friday and was down 1.6% for the week, settling at $62.14 a barrel. Brent crude ended the week at $66.11, down 0.90%.

Shares in Europe rose in hopes of a strong revival in the global economy and corporate earnings, despite a resurgence in coronavirus infections. In local currency terms, the pan-European STOXX Europe 600 Index posted a seventh successive week of gains, rising 1.20%. Germany’s Xetra DAX Index advanced 1.48%, France’s CAC 40 gained 1.91%, and Italy’s FTSE MIB added 1.29%. The UK’s FTSE 100 Index added 1.5%.

Core bond yields in the Eurozone edged higher as investors sold existing bonds to create space for long-dated issues from a number of Eurozone countries. News reports suggesting that Europe would receive additional vaccine supplies in the second quarter also lifted yields. Yields dropped slightly after the US imposed new sanctions on Russia. Yields in peripheral European economies widely tracked the core markets this week. UK gilt yields broadly followed U.S. Treasury yields lower.

Most of the major US benchmarks recorded their fourth successive week of gains and moved to record highs. The technology-heavy Nasdaq Composite Index and the small-cap Russell 2000 Index slightly lagged the large- and mid-cap benchmarks and remained below their recent highs. Health care shares were particularly strong within the S&P 500 Index, helped by gains in insurance stocks, while rising gold and copper prices improved mining shares. Energy shares were about flat after dropping at the end of the week. Despite stronger-than-expected economic data, U.S. Treasury yields fell over the week, with the 10-year Treasury note yield declining to 1.57% from 1.67% the previous Friday.

Japanese stock markets were mixed during the week, with both the Nikkei 225 Stock Average (-0.6%) and the broader TOPIX (-0.3%) ultimately finishing the period marginally lower. The yen weakened a little against the U.S. dollar, closing in the high JPY 108 range. Benchmark 10-year government bond yields declined, finishing the week at 0.085%.

The Shanghai Composite broad market index of A-shares fell 0.7% over the week to Friday. The CSI 300 large-cap index, with its higher weight in technology stocks, fell 1.4%. Chinese and Asian markets were broadly higher Friday, following key Chinese economic data. The yield on the 10-year Chinese central government bond fell five basis points (0.05%) to 3.18%. Liquidity assurances from the People’s Bank of China, China’s central bank, also helped ease worries about a possible increase in funding costs. In foreign exchange markets, the Renminbi had a good week, gaining 0.5% against the U.S. dollar.

There was a positive outlook all around for commodities, as they closed up the week with good gains. The weaker dollar for most of the last week also helped boost oil prices (and gold). West Texas Intermediate (WTI) crude, the US benchmark, fell 33 cents to settle at $63.13 a barrel Friday, while Brent Crude for June delivery eased 17 cents to $66.77 a barrel. That left WTI oil up around 6.3% for the week, and Brent 5.8% higher thanks to the International Energy Agency and OPEC raising their demand forecasts for the rest of 2021, and a larger than anticipated fall in US oil stocks, especially on the East Coast.

Gold for June delivery rose $13.40 to $1,780.20 an ounce. Silver for May delivery rose 15 cents to $26.11 an ounce, and May copper fell 5 cents to $4.1680 a pound. That left gold up 1.9% for the week, silver up 2.8%, and copper gained almost 3%, despite that substantial fall on Friday (a surprise given the solid Chinese production and investment data, as well as the upbeat GDP number).

Shares in Europe rose on growing hopes that injections of fiscal stimulus and pacifistic central bank policies would stimulate a global economic rebound. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 1.16% higher. Major stock indexes were mixed. France’s CAC 40 gained 1.09%, Germany’s Xetra DAX Index added 0.84%, and Italy’s FTSE MIB fell 1.14%. The UK’s FTSE 100 Index advanced 2.65%, to some extent owing to a weaker UK pound, which fell on worries about vaccine supply issues and profit taking after a strong quarter.

Treasury bond yields in the eurozone ended slightly higher. They initially rose on the better-than-expected U.S. jobs data released the previous week, before falling on worries about the slow progress in Europe’s vaccination program. Once conditions become favourable, yields climbed again after minutes from the European Central Bank’s March meeting suggested it was willing to slow bond purchases. Peripheral Eurozone yields were mixed. Italian yields rose as investors sold existing bonds to include the country’s unexpected sovereign bond offering. Portuguese and Spanish bond yields fell on vaccine worries and tighter coronavirus restrictions. UK gilt yields followed U.S. Treasury yields lower.

Most of the major US benchmarks moved gradually higher to record highs, although the small-cap Russell 2000 Index recorded a modest loss. The technology-heavy Nasdaq Composite Index outperformed the broad market S & P 500 Index, but remained below its February peak. Tech shares also gained back the lead within the S&P 500 during the week, assisted by solid gains in Apple and Microsoft– which together represent roughly 40% of the sector’s market capitalisation.

The yield on the benchmark 10-year U.S. Treasury note increased to some degree on Friday morning in response to the producer price inflation data but moved slightly lower for the week as a whole. (Bond prices and yields move in opposite directions.) Speaking Thursday before the International Monetary Fund (IMF), Fed Chair Jerome Powell stressed that the global economy would remain fragile until the pandemic is brought under firm control and that the U.S. recovery remained “incomplete and uneven.”

Japanese stock markets started the week positively, with the extensively followed Nikkei 225 Stock Average breaking through the 30,000 mark early in the period. The rest of the week made for a more mixed picture, however, and the Nikkei 225 ultimately finished slightly lower than it started. The broader TOPIX was also marginally lower. The yen strengthened a little against the U.S. dollar, closing in the high JPY 109 range. Benchmark 10-year government bond yields were a little lower at just above 0.10%.

Chinese stocks recorded a weekly loss, extending several weeks of underperformance against other major global markets. The large-cap CSI 300 Index fell 2.4% and the benchmark Shanghai Composite Index shed 1.0%. In fixed income markets, the yield on China’s 10-year bond rose slightly to close at 3.21% amid signs of ongoing economic recovery. Global funds reduced their holdings of Chinese government bonds in March for the first time since February 2019, Bloomberg published.

Commodity prices were also mixed with oil down but metals like gold, iron and copper ore up for the week. US West Texas Intermediate (WTI) crude dipped 0.5% to settle at $59.32 a barrel, while Brent Crude settled at $62.95 a barrel, down 0.4% the day. For the week WTI fell 3% and Brent was off 2.8%. Gold fell from Thursday’s one-month peak, weighed down by a rebounding dollar and rising Treasury yields. It settled at $1,744,80, down 0.8% on the day but up the same amount for the week.