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Market Updates

23rd – 30th July 2021

Market Update

Equities in Europe were little changed for the week. A positive outlook stimulated by strong corporate earnings was offset by worries about the spread of the delta variant of the coronavirus and volatility spurred by Chinese regulators cracking down on domestic technology and education companies. In local currency terms, the pan-European STOXX Europe 600 Index ended flat. Major indexes were mixed. Germany’s Xetra DAX Index fell 0.80%, France’s CAC 40 Index gained 0.67%, and Italy’s FTSE MIB Index rose 0.95%. The UK’s FTSE 100 Index ended was roughly flat.

Eurozone bond yields fell on concerns about the spread of the coronavirus, and doubts about reflation expectations and wider economic recovery. Peripheral market yields generally followed core markets, falling after the European Central Bank (ECB) suggested inflation could temporarily overshoot its 2% target. UK gilt yields also tracked yields in other core markets.

The major US indexes were mixed for the week. The large-cap benchmarks and the technology-focused Nasdaq Composite index managed record highs before retreating Friday to end the week with modest losses. The S&P MidCap 400 Index and the small-cap Russell 2000 Index broke a string of underperformance and recorded gains. Recently underperforming utilities shares reversed course and were among the best performers in the S&P 500 Index, along with materials and real estate stocks. Reflecting the downward growth and inflation surprises, the yield on the benchmark 10-year U.S. Treasury note ended lower for the week. (Bond prices and yields move in opposite directions.).

The eurozone economy bounced back from recession in the second quarter, growing by a faster-than-expected 2% relative to the first three months of 2021. The year-over-year growth rate of 13.7% also topped prominent estimates. Output expanded in Germany, France, Italy, and Spain, although the uptick in Germany came below forecast due to supply bottlenecks that hindered its manufacturing sector. Euro area inflation accelerated to 2.2% in July from 1.9% in June, lifted by higher energy prices. Excluding food and fuel prices, the inflation rate held steady at 0.9%.

Japan’s major stock benchmarks faced headwinds, as COVID-19 cases reached a record level and the government extended a state of emergency to combat the spread of the virus. The Nikkei 225 Index was down 0.96%, while the broader TOPIX Index lost 0.17%. The equity markets reopened Monday after a four-day weekend to mark the start of the Tokyo Olympics. The yield on the 10-year Japanese government bond ticked up to 0.020%, while the Yen finished the week and strengthened at 109.6 against the U.S. dollar.

Chinese stocks dropped after a regulatory overhaul of the for-profit education sector unveiled July 24 proved much tougher than investors expected, and fears of heightened government oversight spilled into Chinese technology, health care, and property stocks. The large-cap CSI 300 Index sank 5.5% in its worst weekly drop since February, according to Bloomberg. For July, the benchmark shed 7.9%, its biggest monthly drop since October 2018. In Hong Kong, the Hang Seng Index declined 1.4% for the week after the benchmark index shed more than 8.0% on Monday and Tuesday on record-high volumes.

China’s stock market sell-off had a relatively mild impact on the domestic bond and currency markets. The yield on the 10-year Chinese government bond shed eight basis points to close at 2.85%. The Renminbi currency edged up 0.3% against the U.S. dollar to 6.46, a gain analysts blamed more to dollar weakness than to the broader stock sell-off.

Oil prices jumped sharply for a second day in a row on Friday, hitting their highest levels in more than a year, after the stronger-than-expected US jobs report and decision by OPEC and its allies not to increase supply in April. The surge took weekly gains to between 5% and 7% for Brent and West Texas Intermediate (WTI) crude, as prices reached levels last seen in January 2020. Gold dipped again, as did silver, iron ore faded, but copper bounced on Friday. Gold finished the week under $1,700 an ounce and at a 9-month low.

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.

16th – 23rd July 2021

Market Update

Equities in Europe rose on optimism about the upcoming corporate earnings season and the European Central Bank’s (ECB) reaffirmation of its pacifistic monetary policies. These tailwinds helped reverse early weakness, resulting from fears that the spread of the delta variant of the coronavirus could prolong a global economic recovery. In local currency terms, the pan-European STOXX Europe 600 Index ended 1.49% higher. The main European stock indexes also gained, with France’s CAC 40 Index up 1.68%, Italy’s FTSE MIB Index advancing 1.34%, and Germany’s Xetra DAX Index adding 0.83%. The UK’s FTSE 100 Index ticked up 0.28%.

Core eurozone government bond yields fell. Worries about the spread of the coronavirus and the ECB, which reiterated its view that inflationary pressures should prove transitory, contributed to demand for high-quality government bonds. Peripheral eurozone bond yields largely tracked core markets. UK gilt yields fluctuated, as surging coronavirus cases spurred flows into bonds midway through the week.

The ECB kept its key policy measures unchanged, but revised its forward guidance, indicating it would keep interest rates “at their present or lower levels until it sees inflation reaching 2% well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2% over the medium term.” The ECB indicated this process could involve a short period in which inflation goes moderately above this target.

US stocks ended the week higher, rebounding from a sell-off on Monday. The advance was somewhat narrow, however, with much of the gains concentrated in technology and internet-related giants– the so-called FANG+ stocks.

U.S. Treasury yields followed a similar pattern to the equity benchmarks. Growing fears surrounding the delta variant spurred a steep decline in the benchmark 10-year Treasury note yield at the start of the week, which was exacerbated by technical trading factors that pushed long-term yields on Tuesday morning to their lowest levels since early February. (Bond prices and yields move in opposite directions.) Yields quickly retraced earlier moves, as worries over potential lockdowns in the U.S. eased, and demand for new issuance of investment-grade mortgage-backed securities and corporate bonds appeared to pull some investors away from Treasuries.

Japan’s stock markets closed in negative territory on Wednesday, ahead of a long weekend that marked the start of the Tokyo Olympics. The Nikkei 225 Index was down 1.63%, and the broader TOPIX Index fell 1.44%. Concerns that the Olympic games would worsen the country’s COVID-19 outbreak weighed on markets. News that support for Prime Minister Yoshihide Suga’s cabinet slid to its lowest level since he took office in September last year also dampened sentiment. The yield on the 10-year Japanese government bond fell to 0.016%, while the yen depreciated slightly to 110.45 against the U.S. dollar.

Chinese stocks recorded a mixed week. The Shanghai Composite Index rose 0.3% and outpaced the large-cap CSI 300 Index, which declined 0.1%, according to Reuters. Bond yields moved lower, as the yield on the 10-year sovereign bond shed 4 basis points to end the week at 2.93%. In currency markets, the Renminbi edged up 0.2% to close at 6.47 against the U.S. dollar.

Oil prices gained ground, rebounding the slide after OPEC+ agreed to ease its production cap over the next year or more. Brent crude oil is trading at USD 72.07 a barrel, easing in the afternoon and after-hours Friday. It was up 0.2% for the session and 0.4% for the week. Brent crude settled at $74.09 a barrel to be up around 1.2% for the week.

Gold remained over the $US1,800 mark, but is struggling to build positive momentum, given every opportunity by the rise of the new Delta Covid variant.

Lawsons Equity – Financial Planning 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.

9th July – 16th July 2021

Market Update

Equities in Europe fell on worries the rise in coronavirus cases could hinder economic recovery. Some market participants are also concerned that central banks may tighten monetary policy sooner than expected to subdue inflation. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.64% lower. Major European stock indexes also dropped. France’s CAC 40 Index slid 1.06%, Italy’s FTSE MIB Index slipped 1.03%, and Germany’s Xetra DAX Index weakened 0.94%. The UK’s FTSE 100 Index fell 1.60%.

Core eurozone government bond yields dropped, mostly tracking the move in U.S. Treasury yields, as U.S. Federal Reserve and European Central Bank (ECB) officials reaffirmed the view that inflationary pressures would prove transitory. Concerns about the rapidly spreading delta variant of the coronavirus also weighed on yields. Peripheral eurozone bond yields broadly tracked core markets. UK gilt yields ended roughly flat, as higher-than-expected inflation and hawkish commentary from two Bank of England policymakers offset some downward pressure on yields from the move in U.S. Treasuries.

The major US indexes ended lower, but the S&P 500 Index and Nasdaq Composite reached new intraday highs at midweek before falling back. The small-cap Russell 2000 Index underperformed for the third consecutive week, further giving up its leadership over the large-cap S&P 500 Index for the year-to-date period.

The yield on the benchmark 10-year U.S. Treasury note jumped briefly following the release of the retail sales data, but ended lower for the week. (Bond prices and yields move in opposite directions.) Despite the rally in Treasuries, the broad municipal bond market was little changed over most of the week.

Japan’s stock markets registered modest gains for the week, with the Nikkei 225 Index up 0.22% and the broader TOPIX Index gaining 1.04%. Tokyo was placed under its fourth coronavirus state of emergency, lasting until August 22 and covering the duration of the Olympic Games, as part of the government’s efforts to contain a resurgence in COVID-19 infections. The capital registered its highest daily count in new cases since January during the week. Against this backdrop, the yield on the 10-year Japanese government bond fell slightly to 0.02%, while the yen was broadly unchanged at JPY 110.04 against the U.S. dollar.

In a choppy week, the Shanghai Composite Index and large-cap CSI 300 Index rose by 0.4% and 0.5%, respectively. Markets showed relief after China’s second-quarter gross domestic product (GDP) report on Thursday was in line with expectations. China’s bond market recorded inflows of USD 10 billion in June. The yield on the 10-year government bond fell five basis points to 2.97%, marking the first time since August 2020 it fell below 3.0%. In currency markets, the Renminbi was little changed and closed at 6.471 versus the U.S. dollar.

OPEC+ ministers were due to meet overnight Sunday (Sydney time) to break the deadlock and try on a new output policy between Saudi Arabia and their smaller Gulf rivals, the United Arab Emirates (UAE). Ahead of that news emerging at the weekend, Brent crude settled down 12 cents at $73.59 a barrel on Friday, while in New York West Texas Intermediate (WTI), crude rose 16 cents to settle at the end of the week at $71.81 a barrel.

West Texas Intermediate fell around 4%, and Brent crude dipped 3% in what were the largest falls for five months, as nervousness about the lack of a deal on a new production cap rattled confidence.

Gold fell by $14 an ounce to $1,815 an ounce, and continued to fall in late trading to around $1,812. That still left gold up 0.2% for the week, but there’s a chance the price will slide again, with more attention focused on rising Covid Delta infections.

Lawsons Equity – Financial Planning 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.

2nd July – 9th July 2021

Market Update

Shares in Europe ended little changed, recovering from a sharp pullback stemming from worries that a surge in coronavirus cases might hinder global economic growth. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.19% higher. Major indexes were mixed. Germany’s Xetra DAX Index ticked up 0.24%, France’s CAC 40 Index declined 0.36%, and Italy’s FTSE MIB Index dropped 0.91%. The UK’s FTSE 100 Index ended the week flat.

Core eurozone bond yields tracked U.S. Treasury yields lower as global bonds rallied. The swift spread of the delta variant of the coronavirus and weak U.S. services activity data stimulated concerns about the economic outlook and drove demand for high-quality government bonds, pushing yields lower. Peripheral eurozone government bonds and UK gilts largely tracked core markets this week.

The major US benchmarks closed mixed, with large-caps and growth stocks outperforming for the second consecutive week. Within the S&P 500 Index, the interest rate-sensitive real estate sector performed best, as longer-term Treasury yields decreased sharply. Energy stocks fared the worst on worries that disagreements among major oil producers would result in some violating output restrictions. Weakness among media firms also weighed on the communication services sector. Markets were closed Monday in observance of Independence Day.

The major driver of sentiment during the week appeared to be the steep decline in U.S. Treasury yields, with the yield on the benchmark 10-year Treasury note hitting a nearly five-month low on Thursday. The 10-year Treasury note yield sank to 1.25% in intraday trading on Thursday, before partially retracing earlier moves.

The European Central Bank (ECB) adopted a 2% inflation target over the medium term– discarding the previous objective of “below, but close to, 2%”– after reviewing its strategy. ECB President Christine Lagarde said the new target meant the central bank “considers positive and negative deviations of inflation from the target equally undesirable.” She said the ECB would use “persistent or especially forceful monetary policy action” when interest rates are close to their lower limit and inflation remains below its target. The shift “may also imply a transitory period in which inflation is moderately above the target.” Lagarde said the new strategy was “quite squarely” not the same as the U.S. Federal Reserve’s average inflation policy.

Japan’s stock markets noted sharp losses for the week, with the Nikkei 225 Index falling 2.93% and the broader TOPIX Index down 2.25%. Concerns dampened sentiment that the spread of the delta variant of the coronavirus would stall a global economic recovery. The yield on the 10-year Japanese government bond pulled back to 0.03% amid expectations that major central banks will not tighten monetary policy any time soon, while the pandemic continues to pose risks to growth. The yen strengthened to JPY 110.01 against the U.S. dollar on safe-haven demand.

Chinese stocks were mixed for the week, with the benchmark Shanghai Composite Index edging slightly higher and the large-cap CSI 300 Index recording a modest loss. Selling was pronounced in technology stocks amid heightened regulatory risk on reports that Beijing will tighten oversight of U.S.-listed Chinese companies, many of which are in the tech sector, as well as the government’s continued crackdown on domestic tech companies. For the week, the yield on China’s 10-year sovereign bond fell eight basis points to 3.02%. The Renminbi currency shed 0.2% to close at 6.487 against the U.S. dollar.

In commodities, Brent crude oil futures were up $1.43 or 1.93%, at $75.55. US West Texas Intermediate futures were up $1.62, or 2.2%, at $74.56. Prices on both sides of the Atlantic ended the week little changed, despite significant daily fluctuations.

Gold gained 0.6% to $1,810.60 an ounce, silver rose 0.4% to $26.25 an ounce, and copper surged 1.9% to $4.34 a pound. That’s the first time in three weeks that gold has climbed over and ended above $1,800 an ounce. That left the metal up 1.8% for the week.

Lawsons Equity – Financial Planning 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.

25th June – 2nd July 2021

Market Update

Equities in Europe were slightly down on concerns that inflationary pressures may advance interest rate increases. An additional headwind was the spread of a highly infectious variant of the novel coronavirus, which shadowed the outlook for an economic recovery. In local currency terms, the pan-European STOXX Europe 600 Index slipped 0.18%. Major indexes were mixed.

Germany’s Xetra DAX Index rose 0.27%, while France’s CAC 40 Index fell 1.06%, and Italy’s FTSE MIB Index declined 0.89%. The UK’s FTSE 100 Index gave up 0.18% of its value.

Core eurozone government bond yields fell, reflecting increasing fears about the spread of the delta variant of the coronavirus in Europe. Comments from European Central Bank (ECB) President Christine Lagarde highlighting the risk of virus variants and their potential effects on the Eurozone economic recovery also weighed on yields. Peripheral bond yields broadly tracked core markets.

UK gilt yields similarly fell in tandem with core markets. Bank of England Governor Andrew Bailey restated the view that the uptick in UK inflation would prove transitory appeared to contribute to the decline in gilt yields.

The S&P 500 Index and Nasdaq Composite Index moved to new highs and closed out a fifth consecutive quarterly advance. Large-cap growth stocks led the gains, with the Russell 1000 Growth Index stretching its weekly winning streak to eight. Technology and health care stocks led the gains within the S&P 500, and consumer discretionary stocks were also strong, boosted by a solid rise in Nike shares. Small- and mid-caps underperformed after strong gains the previous week.

Japan’s stock market returns were negative for the week, as concerns about rebounding coronavirus infection rates eroded optimism about progress in the country’s vaccination drive.

The Nikkei 225 Index fell 0.97%, while the broader TOPIX Index finished 0.32% lower. The yen weakened to its lowest level since February 2020, closing the week at JPY 111.43 against the U.S. dollar. The yield on the Japanese 10-year government bond declined to 0.046%.

Chinese stocks fell for the week. Both the Shanghai Composite Index and large-cap CSI 300 Index posted a weekly loss after each index recorded its biggest one-day percentage drop since early March on Friday, Reuters reported.

Bond yields were unchanged for the week, with the yield on the 10-year sovereign bond ending at 3.10%. In currency trading, the Renminbi shed 0.4% against the U.S. dollar to RMB 6.479 per dollar.

OPEC and non-OPEC ministers (led by Russia) finished Friday’s virtual meeting without a resolution. The lack of agreement didn’t worry oil markets all that much. Brent crude settled up 33 cents, or 0.44% at $76.03, and US West Texas Intermediate (WTI) crude settled down 7 cents, or 0.09% at $75.16. That left Brent up 0.9% for the week and WTI up 1.6%.

Gold and silver continue to move sideways despite the solid jobs report for June and higher wages. Gold rose 0.4% to $1,783.30 an ounce, and then rose in after-hours trading to around $1,787 an ounce, leading to faint hopes of regaining $1,800 this week.

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.

18th – 25th June 2021

Market Update

European shares rose in volatile trading, buoyed by a reaffirmation of ultra-loose monetary policy and a bipartisan agreement on a huge U.S. infrastructure spending plan. The pan-European STOXX Europe 600 Index finished the week 1.23% higher. The main stock indexes also posted gains. Germany’s Xetra DAX Index rose 1.04%, France’s CAC 40 0.82%, and Italy’s FTSE MIB 1.16%. The UK’s FTSE 100 Index added 1.69%.

BoE policymakers voted unanimously to keep the key interest rate at 0.1% and by eight to one to maintain the asset purchase program until the end of the year. The central bank stated inflation could reach as high as 3% and economic growth would be strong, but the increases would be temporary.

Core eurozone government bond yields ended the week marginally higher. German bund yields initially tracked rising Treasury yields, and were then elevated further by strong purchasing managers’ index (PMI) data and business confidence readings. Yields then fell in sympathy with the Bank of England’s (BoE) pacifistic outlook, before inching back up ahead of Friday’s U.S. inflation print. Peripheral eurozone bond yields also varied, while UK gilt yields ended lower after the BoE reaffirmed its view that near-term inflation strength would be transitory.

US Stocks bounced back from the previous week’s declines, bringing the S&P 500 Index and the technology-heavy Nasdaq Composite index to new highs and assisting both record their best weekly gains since early April. Energy shares fared best within the S&P 500 as oil prices reached their highest levels since October 2018 on decreasing global inventories. Utilities and real estate stocks lagged.

Inflation fears appeared to resurface late in the week. The yield on the benchmark 10-year Treasury note jumped on Friday morning following a report that the Fed’s preferred inflation gauge– the core (less food and energy) personal consumption expenditures index– had risen 0.5% in May, bringing the year-on-year increase to its fastest pace (3.4%) since 2008.

Japanese stocks had a turbulent start to the week, falling sharply on the first trading day before rebounding on the second. Sentiment soured after the U.S. Federal Reserve’s hawkish pivot increased concerns about an earlier-than-expected tapering of its accommodative policies. Reassurances from the central bank that it will continue its supportive stance to ensure the sustained improvement of the economy helped stabilise markets.

The Nikkei 225 Index returned 0.35% for the week. The TOPIX was up 0.83%. The Japanese yen fell against the U.S. dollar to its lowest level since March 2020 during the week. The yield on the Japanese 10-year government bond fell to 0.05%.

China’s large-cap CSI-300 Index added 2.7% and the Shanghai Composite Index rose 2.3%, ending a three-week losing streak. Financial stocks led the rally after the People’s Bank of China (PBoC) injected liquidity into the financial system for the first time since February.

The yield on China’s 10-year sovereign bond fell 10 basis points, closing the week at 3.10%. In currency markets, the renminbi began the week on a weak note but subsequently rallied to end flat against the U.S. dollar at RMB 6.453.

Last week saw oil prices rise for a fifth week, reaching their highest since October 2018, on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.

Lawsons Equity – Financial Planners 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.

Market Update

11th – 18th June 2021

Shares in Europe fell after the U.S. Federal Reserve indicated it would increase rates sooner than previously anticipated. In local currency terms, the pan-European STOXX Europe 600 Index slid 1.19%. Germany’s Xetra DAX Index fell 1.56%, Italy’s FTSE MIB Index fell 1.94%, and France’s CAC 40 Index eased 0.48%. The UK’s FTSE 100 Index slipped 1.63%.

Core eurozone government bond yields rose with U.S. Treasury yields after the Fed communicated plans to begin increasing interest rates in 2023. Comments from the European Central Bank (ECB) helped moderate this move. Peripheral government bond yields broadly tracked core markets. Greek five-year government bond yields turned negative for the first time, reflecting the ECB’s plan to continue its monthly bond-buying program. UK gilt yields ended higher on increased expectations that the Bank of England (BoE) would tighten policy after inflation exceeded the bank’s target, and on the Fed’s more aggressive stance.

UK inflation jumped again in May, accelerating to 2.1%, on higher prices for clothing, fuels, and meals in bars and restaurants. The increase was above economists’ forecasts and the BoE’s target. If the inflation rate consistently exceeded the BoE’s target, governor Andrew Bailey said last month he would not hesitate to tighten monetary policy.

US stocks declined as a surprisingly aggressive outcome from the Federal Reserve’s June 15– 16 policy meeting, and late-week remarks from a Fed official about potentially earlier-than-expected rate hikes dragged the Dow Jones Industrial Average lower. The Dow includes many cyclical companies — those most dependent on economic growth. However, the tech-heavy Nasdaq Composite index posted a much more modest loss. The broad market S&P 500 Index declined.

U.S. Treasuries were volatile following the policy meeting. The 10-year U.S. Treasury yield increased sharply after the Fed meeting on Wednesday, before falling on Thursday and Friday. (Bond prices and yields move in opposite directions.) Short- and intermediate-term Treasury yields experienced more sustained increases. The difference in yield on five- and 30-year Treasuries reached a lower level than where it started 2021, a trend that could weigh on financial stocks because banks tend to profit from larger spreads between short- and long-term rates.

Japan’s stock markets generated mixed returns for the week, with the Nikkei 225 Index rising 0.05% and the broader TOPIX Index down 0.38%. The yield on the Japanese 10-year government bond rose to 0.06%, while the yen weakened to JPY 110.23 against the U.S. dollar.

Chinese stocks recorded their third weekly loss. The large-cap CSI 300 Index fell 2.3%, and the Shanghai Composite Index shed 1.8%. The yield on China’s 10-year government bond rose five basis points to 3.20%.

Brent crude futures rose 43 cents, or 0.6%, to settle at $73.51 a barrel on Friday, while US West Texas Intermediate (WTI) crude rose 60 cents, or 0.8%, to $71.64 a barrel. Both were up around 1% for the week. Gold shed $110 an ounce last week, again thanks to the Fed’s inflation and interest rates announcements. It fell 0.6% on Friday to $1,762.63 per ounce, with prices down around 5.7% on the week. Silver lost 7.8% for the week after closing at $28.85.

Lawsons Equity – Financial Planners 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.

Market Update

4th June – 11th June 2021

Shares in Europe advanced for the fourth week in a row, to some extent lifted by the European Central Bank’s (ECB) pledge to carry on with its high bond purchases in the upcoming quarter. In local-currency terms, the pan-European STOXX Europe 600 Index ended up 1.09% higher. France’s CAC 40 Index climbed 1.30%, while Italy’s FTSE MIB Index advanced 0.57%. Germany’s Xetra DAX Index was little changed. The UK’s FTSE 100 Index gained 0.92%.

Treasury yields in the Eurozone fell largely, reflecting the ECB’s commitment to continue its bond-buying program at its current pace for another quarter. The central bank forecast also called for inflation to come and subside in well below its target in 2023. UK gilt yields broadly tracked yield in core markets.

The European Central Bank (ECB) anticipates inflation in the Eurozone to rise by 1.9% in 2021, compared to the previous estimation of 1.5%. The central bank’s revised forecast calls for inflation to slow to 1.4% in 2023. The Eurozone economy is expected to grow 4.6% this year and 4.7% next year — in both of these instances, a 60-basis point rise from the ECB’s previous forecast.

In the UK, outgoing Bank of England (BoE) chief economist Andy Haldane warned the BoE could face an inflationary spiral if it does not act swiftly. The economy expanded 2.3% in April, the fastest rate since July, driven by growth in services as lockdown measures eased.

A sharp decline in longer-term bond yields appeared to help push the S & P 500 index to a record high in a week of relatively light summer trading. The decline in yields favoured growth stocks by reducing the implied discount on future earnings while weighing on financials by threatening bank lending margins. The technology-heavy Nasdaq Composite Index outperformed and marked its fourth consecutive weekly gain, while the narrowly focused Dow Jones Industrial Average recorded a modest loss.

U.S. Treasuries rallied through most of the week as many investors sought to unwind positions that would benefit from price declines, as the yield on the 10-year U.S. Treasury note fell to its lowest level in three months. (Bond prices and yields move in opposite directions.).

Japan’s stock market returns were broadly unchanged for the week, with the Nikkei 225 Index up 0.02% and the broader TOPIX Index falling 0.26%. While the economic recovery in the country remains fragile, the government has lifted the coronavirus quasi-states of emergency in three prefectures in the face of steadily falling infection rates and easing pressure on hospitals.

The yield on the Japanese 10-year government bond fell to 0.03%, its lowest level since January, as the U.S. Centres for Disease Control and Prevention announced it was easing travel recommendations for more than 110 territories and countries, including Japan just ahead of the Olympics. The yen continued to hover around the JPY 109.5 level against the U.S. dollar.

Chinese stocks fell for a second week. The CSI 300 Index of large-cap stocks fell 1.1%, while the broader Shanghai Composite Index edged down 0.1%. In China’s bond markets, the trend in yields since late May has been progressively higher. The yield on the 10-year Chinese government bond rose four basis points to close at 3.15% following higher producer price inflation. In currency markets, the RMB (renminbi) finished flat against the U.S. dollar in a week marked by near-zero volatility.

Oil prices reached fresh multi-year highs on Friday, closing out a third straight week of gains on an improved outlook for worldwide demand, as rising COVID-19 vaccination rates help lift pandemic curbs.

Brent crude futures settled at $72.69 a barrel, rising 17 cents after reaching their highest since May 2019. For the week, Brent was up 1%.

U.S. West Texas Intermediate (WTI) crude futures settled at $70.91 a barrel, up 62 cents, settling at their highest since October 2018. WTI was up 1.9% on the week.

Gold for August delivery fell $16.80 to $1,879.60 an ounce. Silver for July delivery rose 12 cents to $28.15 an ounce, and July copper rose 5 cents to $4.54 a pound.

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.

Market Update

28th May – 4th June 2021

Equities in Europe rose amid optimism around the possibility of an economic recovery. Concerns that central banks may begin withdrawing stimulus sooner than anticipated because of inflationary pressures curbed equities’ advance. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.80% higher. Italy’s FTSE MIB Index climbed 1.59%, Germany’s Xetra DAX Index gained 1.11%, and France’s CAC 40 Index added 0.49%. The UK’s FTSE 100 Index rose 0.66%.

Core eurozone bond yields drifted lower as remarks from some policymakers contributed to expectations that the European Central Bank (ECB) would likely choose to maintain the pace of bond purchases at its June 10 meeting. Yields in peripheral European bond markets tracked their core counterparts. UK gilt yields mostly followed the upward move in U.S. Treasury yields.

The major US indexes closed somewhat higher in a shortened trading week, with markets closed Monday in observance of Memorial Day. Energy shares performed best within the S&P 500 Index as oil prices reached their highest level in two years. Consumer discretionary shares lagged, weighed down by a decline in Tesla. Trading volumes were generally light, as is typical of the beginning of the summer holiday season.

After increasing early in the week, the yield on the benchmark 10-year U.S. Treasury note fell back on Friday following the May payrolls report. (Bond prices and yields move in opposite directions.) The broad municipal bond market outperformed Treasuries over much of the week. According to the latest data from Lipper, municipal bond funds industrywide received net inflows of nearly USD 1 billion for the week ended June 2, including strong flows into tax-exempt high yield portfolios.

Eurozone inflation increased 40 basis points sequentially to 2% in May– above the ECB’s stated target of “below but close to 2%.” Higher energy costs were a big part of the increase in consumer prices. Core inflation, which excludes volatile food and energy costs, ticked up to 0.9% from 0.8%.

Japan’s stock market returns were mixed for the week, with the Nikkei 225 Index dropping 0.71% and the broader TOPIX Index gaining 0.60%. Sentiment continued to be weak following the government’s extension of the coronavirus state of emergency in Tokyo, Osaka, and seven other prefectures by three weeks to June 20. The yield on the Japanese 10-year government bond was little changed at 0.08%, while the yen weakened to close at around JPY 110.18 against the U.S. dollar.

Chinese stocks pulled back after recording three weeks of gains. The large-cap CSI 300 Index shed 0.7% and the benchmark Shanghai Stock Exchange edged down 0.2%. Foreign investors bought USD 8.7 billion of Chinese stocks in May, the highest single month this year according to Reuters.

In the bond market, the downtrend in yields took a breather. The yield on the 10-year Chinese government bond (CGB) rose 2 basis points to 3.11%, a relatively high level compared with other major government bond yields. Over the last six months, Bloomberg’s local currency index for CGBs returned 3.4%, while the spread over comparable 10-year U.S. Treasury yields tightened almost 100 basis points.

Most commodities finished the week with solid gains, thanks in part to the better-than-expected US jobs data for May, a weaker dollar and continuing positive news on the health of major economies. Oil rose, gold bounced back, as did copper, iron ore jumped 8% over the week.

Gold swayed after jumping the most in 10 months in May to top the $1,900 an ounce level on worries that a faster economic growth could spur inflation, forcing governments and central banks to tighten policy. Helping was the weekly data on US oil stocks– they rose a touch after a couple of weeks of rises. They fell 5.1 million barrels to around 479 million– still 3% under the average for this time of year.

Brent crude rose 58 cents, or 0.8%, to settle at $71.89 a barrel, after touching $72.17, its highest since May 2019. US West Texas Intermediate crude rose 81 cents, or 1.2%, to settle at $69.62. The session high was $69.76, its highest since October 2018.

Lawsons Equity – Financial Advisors Malta

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced 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

Market Update

21st – 28th May 2021

Equities in Europe continued to support ultra-easy monetary policy and reports on a massive US fiscal spending plan. In local currency terms, the pan-European STOXX Europe 600 Index ended the week up 1.02%. France’s CAC 40 gained 1.53%, Germany’s Xetra DAX Index added 0.53%, and Italy’s FTSE MIB Index advanced 0.78%. The UK’s FTSE 100 Index ended roughly flat, in part reflecting the UK pound’s appreciation versus the U.S. dollar. The reopening of the economy and comments from Bank of England (BoE) policymaker Gertjan Vlieghe, who said the central bank could increase interest rates in the first half of next year, helped the currency rise for a fifth week in a row.

Core eurozone bond yields eased. Germany’s 10-year bund rallied early in the week, supported by pacifist comments from European Central Bank policymakers, who said they saw no evidence of sustained inflationary pressure, and that ending emergency bond purchases would be premature. Yields abruptly rose toward the end of the week as U.S. Treasury yields dropped. Bond yields in peripheral European markets largely tracked those in the core. UK gilt yields were broadly flat after an unstable week. They followed core markets lower early on, but increased sharply after Vlieghe’s remarks,

Due to differences in wages and immigration, Switzerland abandoned talks on a framework trade agreement with the European Union (EU) that would order access to the single market. The end of the seven-year negotiations means existing treaties with the bloc’s fourth largest trading partner could eventually expire.

US Equities recorded solid gains for the week, bringing the large-cap S&P 500 Index to within roughly 0.5% of the all-time intraday high it established on May 7, and leaving it with a small gain for the month. The technology-heavy Nasdaq Composite and small-cap Russell 2000 indexes performed best. Growth shares easily outperformed their value counterparts; Facebook and Google parent Alphabet helped communication services stocks outperform within the S&P 500, and a rebound in Tesla boosted consumer discretionary shares. The light trading volumes came in advance of the long Memorial Day weekend, with US markets scheduled to close today (Monday, May 31).

Fixed income investors appeared to be reassured by the Fed officials’ comments, with the yield on the benchmark 10-year U.S. Treasury note decreasing over the week. (Bond prices and yields move in opposite directions.) The broad municipal bond market posted positive returns throughout most of the week.

Japan’s stock markets registered a gain for the week, with the Nikkei 225 Index rising 2.94% and the broader TOPIX Index up 2.24%. Signs Japan was speeding up its COVID-19 vaccine rollout were supportive of sentiment. The yield on the 10-year Japanese government bond was broadly unchanged at 0.08%, while the yen weakened notably to around JPY 109.82 against the U.S. dollar.

Chinese equities increased strongly, with both the CSI 300 Index and Shanghai Composite Index posting the best weekly gain in more than three months, according to Reuters. In an attempt to reduce financial risks, policymakers assured zero tolerance for commodity speculation and further cracked down on cryptocurrency mining. Separately, Chinese regulators turned down applications to issue RMB 154 billion of asset-backed securities from various companies, including fintech company Ant Group, according to domestic news portal Sina.com. The amount was twice the amount rejected in 2020, and reflects the government’s renewed focus on curbing financial risks. In credit markets, the yield on the 10-year sovereign bond ended the week at 3.09%.

Last week, witnessed oil, gold, copper, tin, silver and nickel all higher. Gold rose 7.7% in May based on the front month, when the price settled at $1,905.30 an ounce on Friday. That was up 1.3% for the week. Gold prices have risen by nearly $200 an ounce in the past two months, and are up $220 since its 2021 lows in March. It jumped $130 an ounce in May alone.

Oil prices inched higher on Friday, with Brent near $70 a barrel. Brent rose 0.27%, to settle at $69.65 a barrel, but US West Texas Intermediate (WTI) crude dropped 0.36%, to settle $66.61 a barrel. Brent and WTI rose 3.5% and 4.3% respectively in May. Based on Friday’s close for US investors. Brent will trade normally today (Monday).

Lawsons Equity – Financial Advisors Malta

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced 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

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