20th – 27th August 2021

Weekly Market Update

Shares in Europe gained ground on central banks’ accommodative policies, indications that economic growth stayed strong in August, and hopes higher vaccination rates may help prevent hospitalisations and deaths stemming from COVID-19 from climbing to previous highs as economies reopen and case counts increase.

In local currency terms, the STOXX Europe 600 Index advanced 0.75%. Country-specific indexes also moved higher. France’s CAC 40 Index climbed 0.84%, Italy’s FTSE MIB Index ticked up 0.34%, and Germany’s Xetra Dax Index added 0.28%. The UK’s FTSE 100 Index gained 0.85%. Core and peripheral eurozone bond yields rose this week, largely reflecting moves in U.S. Treasuries. UK gilt yields broadly followed core markets this week.

The eurozone economy appeared to remain in expansion mode in August, with the early headline number for IHS Markit’s composite Purchasing Managers’ Index (PMI) coming in at 59.5, a strong reading down modestly from the 15-year high of 60.2 registered in July. (PMI readings greater than 50 indicate an expansion in economic activity levels.).

U.S. equities gained as full Food and Drug Administration (FDA) approval of the Pfizer-BioNTech COVID-19 vaccine, which supported sentiment toward an ongoing economic recovery. The tech-heavy Nasdaq Composite index outperformed the broad market S&P 500 Index and the large-cap Dow Jones Industrial Average. The Russell 2000 Index of small-cap stocks posted impressive gains. Stocks in the energy sector jumped higher as crude oil prices gained about 10% for the week.

U.S. Treasuries posted negative total returns as yields increased. The week’s positive economic data helped push yields higher, while improving sentiment toward riskier assets, such as equities, also weighed on demand for Treasuries, which investors view as a lower-risk asset class.

Japan’s stock markets climbed over the week, with the Nikkei 225 Index gaining 2.31% and the broader TOPIX Index up 2.01%, despite more negative developments on the coronavirus front. The yield on the 10-year Japanese government bond ticked up slightly to 0.02% (from 0.01% the prior week), while the yen fell to JPY 109.9 against the U.S. dollar (from the previous week’s JPY 109.7).

Chinese stocks continued to bounce back from their late-July lows. The Shanghai Composite Index rose 2.8%, and the large-cap CSI 300 Index gained 1.2%. In the bond market, the yield on the 10-year central government bond edged up two basis points to 2.89%. The Renminbi currency appreciated slightly against the U.S. dollar to close at 6.480.

Oil and gold rose sharply for different reasons on Friday. Oil due to a Gulf of Mexico storm, a usual occurrence at this time of the year, gold because Federal Reserve chair Jerome Powell offered no timetable for tapering the central bank’s $120 billion monthly bond purchases.

Brent rose $1.63, or 2.3%, to settle at $72.70 a barrel, while US West Texas Intermediate (WTI) crude rose $1.32, or 2.0%, to settle at $68.74. That was the highest close for Brent since August 2 and for WTI since August 12, according to Rifinitiv data. For the week, Brent jumped by more than 11%, and WTI rose more than 10%, which was the biggest weekly percentage gains for both since June 2020.

Gold for December delivery settled up $24.30 to $1,819.50 an ounce, the highest since the start of this month, and up 2% for the week, and the largest weekly gain since late May.

Lawsons Equity – Financial Advisors Malta

Lawsons Equity Limited is a company registered in Malta with company number C49564 and licensed by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries, click here.