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Market Updates

Market Update 21/05/21

Equities in Europe rose on signs that the economy is rebounding as restrictions instituted to control the coronaviruss spread began to ease. However, worries about inflation curbed gains. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.43% higher. Major indexes were mixed: Italys FTSE MIB Index advanced, while Germanys Xetra DAX Index and Frances CAC 40 Index were little changed. The UKs FTSE 100 Index fell 0.36%, as strong economic data lifted the British pound versus the U.S. dollar.

Core eurozone bond yields ended higher on expectations that the European Central Bank (ECB) could delay its bond purchases. Peripheral eurozone bond yields fell. Uncertainties over Italys economic reform plans and the potential slowing of ECB bond purchases initially drove yields higher, but markets began to stabilise, and peripheral yields ended lower. UK gilt yields fell on concerns about the spread of a new coronavirus strain and its potential to delay the full reopening of the UK economy.

Eurozone business activity accelerated at the fastest pace in three years in May, as virus containment measures eased, a survey of purchasing managers by IHS Markit showed. The flash composite PMI reached 56.9 in May, an improvement from the 53.8 registered in the preceding month. The services sector index climbed to 55.1 from 50.5.

US Stocks posted mixed results in a volatile week of trading, with the large-cap S&P 500 Index ending modestly lower and the tech-heavy Nasdaq Composite Index gaining a little ground. These mixed results likely reflect strength in the U.S. economy, as well as concerns about inflation and the timing of when the Federal Reserve might begin to rein in its accommodative policies. Within the S&P 500, the health care posted the largest gain. Energy and industrials lost ground.

Treasury yields were roughly unchanged for the week. Wednesdays sharp sell-off in cryptocurrencies sparked a bid for Treasuries. However, yields soon increased following the release of the FOMCs April meeting minutes, which led investors to pull forward their expected timeline for rate hikes. (Bond prices and yields move in opposite directions.) Municipal bonds recorded modestly positive returns through most of the week.

Japans stock markets finished the week higher, with the Nikkei 225 Index returning 0.83% and the broader TOPIX Index up 1.13%. Economic data were mixed, with Japans gross domestic product shrinking more than expected in the first quarter. Export growth in April was strong, and manufacturersbusiness confidence rose to its highest level since late 2018 in May. The yield on the 10-year Japanese government bond fell slightly to 0.08%, while the yen strengthened, finishing the week at around JPY 108.66 against the U.S. dollar.

Chinese stocks recorded a mixed week. The benchmark Shanghai Composite Index shed 0.1%, while the large-cap CSI 300 Index, whose growth stocks have fallen in recent weeks, added 0.5%. In the fixed income market, yields on Chinese bonds fell following disappointing April economic data. In currency trading, the Renminbi ended the week roughly unchanged versus the U.S. dollar. The renminbi has strengthened since early April against the dollar, driven by Chinas widening current account surplus, foreign direct investment, and foreign portfolio investment in Chinese bonds and stocks. The Renminbi’s recent appreciation has pushed the official trade-weighted index—which measures the Chinese currencys value against a basket of 24 major currencies—close to its 2018 high.

In commodities, Gold ended the week at a settlement of $1,876.70, up 2.1% for the week. The metal rose $5.20 on Friday, or 0.3%. West Texas Intermediate crude moved higher again on Friday, as did Brent Futures, but still shed value over the week. Brent Futures settled at $66.44. WTI rose 2.7% to settle at $63.58. That was a fall of 2.7% for the week, and came as the number of rigs drilling for oil in the US again rose.

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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 17/05/21

Europe’s shares fell with global markets amid signs of accelerating inflation, sparking fears that interest rates could rise. In terms of local currency, the pan-European STOXX Europe 600 Index ended the week 0.54% lower. Major indexes were mixed. Germany’s Xetra DAX and France’s CAC 40 were little changed, but Italy’s FTSE MIB rose 0.63%. The UK’s FTSE 100 pulled back 1.21%, in part because the British pound appreciated relative to the U.S. dollar after local election victories for the ruling Conservative Party. The FTSE 100 index tends to fall when the pound rises, because many companies in the index are multinationals that generate a significant proportion of their revenues abroad.

Bond yields in the Eurozone rose. A higher-than-expected inflation print in the U.S. triggered a sell-off in high-quality government bonds, causing core yields to rise in tandem with U.S. Treasury yields. Peripheral eurozone bonds largely tracked the moves in core markets. Fears of slowing bond purchases by the European Central Bank (ECB) also led to higher yields. UK gilt yields also tracked U.S. Treasury yields amid global weakness in government bonds.

US stocks slipped back from record highs as investors showed stark signs of higher inflation, but a late rally moderated the week’s decline. Tesla’s weakness weighed in particular on consumer discretionary shares, and Elon Musk’s announcement that the electric car maker would no longer accept Bitcoin as a payment because of its carbon footprint has led to a sell-off in the cryptocurrency. At its low point on Wednesday, the technology-heavy Nasdaq Composite index was down roughly 8.5% from its intraday April 29 peak, still above the widely accepted 10% threshold for a correction.

The bond market appeared to take its cue from the Fed, with the yield on the benchmark 10-year U.S. Treasury note increasing, but staying well below its late-March highs. (Bond prices and yields move in opposite directions.) Municipal bonds outperformed Treasuries through most of the week, but posted negative returns.

Japan’s stock markets recorded significant losses for the week amid a bout of volatility after an unexpectedly sharp rise in the US consumer price index. Accelerating coronavirus infection rates and the announcement that a state of emergency will be declared in three more prefectures also dampened risk sentiment. The Nikkei 225 fell 4.34%, while the broader TOPIX Index was down 2.57%. Risk-off sentiment led the 10-year Japanese government bond yield to rise to 0.09%, while the yen weakened slightly, finishing the week at around JPY 109.41 against the U.S. dollar.

Chinese stocks rose sharply for the week. The benchmark Shanghai Stock Exchange Composite Index gained 2.1%, while the large-cap CSI 300 Index advanced 2.3%. The yield on China’s sovereign 10-year bond ended unchanged at 3.17% after a week of mixed economic data. In April, China reported net inflows of $9 billion into the country’s government bonds. Beijing is keen to attract foreign investment into its domestic green bond market, used to finance renewable energy and other green projects. In currency trading, the Renminbi gained 0.3% against the U.S. dollar, closing at 6.434 per dollar.

In commodities, Gold settled at $18.38 a tonne, up $14.10 an ounce or 0.8%. That left the metal hardly changed from the previous week’s close. Silver rose 1.5% on Friday to end at $27.65 a tonne. Oil was weaker, on Thursday but bounced higher on Friday to end up 0.7% at $65.37 for West Texas Intermediate. Brent also edged higher, settling at $68.71. WTI was up around 1% for the week, Brent by 0.8%.

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.

Weekly Market Update 9/5/21

Equities in Europe rose on stronger-than-expected earnings results and growing confidence in an economic recovery. In local currency terms, the pan-European STOXX Europe 600 Index finished the week 1.72% higher. The French and German stock indexes climbed by more than 1.5%. Italy’s FTSE MIB Index added 1.95%. The UK’s FTSE 100 Index gained 2.29%.

Core bond yields of the Eurozone fell in the first half of the week on underwhelming US manufacturing data. Yields steadied following a European Central Bank policymaker implied that the institution’s bond purchases could slow down in June. The yields on peripheral eurozone government bonds largely rose. They initially tracked core markets lower, but Italian government bonds then sold off after reports surfaced the country would issue debt with 30-year maturity.

Skepticism over the timing of Italy’s recovery package also pushed peripheral yields higher. UK gilt yields fell, tracking early moves in core markets. The Bank of England then revised its forecast for 2021 UK economic growth to 7.25% from 5%, and said it planned to slow bond purchases, causing a momentary rise in yields.

The major US indexes generated mixed returns across a wide range as a Friday rally wiped out some losses early in the week. The narrowly focused Dow Jones Industrial Average fared best, although the technology-heavy Nasdaq Composite Index recorded its worst weekly decline in two months. Technology shares underperformed within the S&P 500 Index, along with consumer discretionary, utilities, and real estate shares.

The discouraging jobs data triggered a temporary but sharp decrease in Treasury yields on Friday morning, helping temporarily push the yield on the benchmark 10-year note to a two-month low before ending up lower for the week. (Bond prices and yields move in opposite directions.).

In a holiday-shortened week, Japanese equities at least temporarily disregarded worries about the coronavirus and associated restriction measures to record a gain.

The Nikkei 225 rose 1.89%, while the broader TOPIX Index finished 1.83% higher. (The market was closed for Golden Week for the first 3 trading days.) Investor confidence was supported by the prospects of a global economic recovery following better-than-expected U.S. data in recent weeks. The yen was broadly unchanged at just above JPY 109 against the U.S. dollar, while the yield on the 10-year Japanese government bond dropped to 0.08%.

Chinese stocks fell also in a holiday-shortened week. The large-cap CSI 300 Index fell 2.5% from the previous Friday, while the Shanghai Stock Exchange Composite Index shed 0.8%. Mainland markets resumed Thursday after being closed Monday through Wednesday for the Labor Day holiday. The yield on China’s 10-year sovereign bond declined three basis points to 3.17%.

In commodities, copper and iron ore hit new all-time highs on Friday as demand for both commodities continued to surge, especially from China. Gold settled higher as prices remained above $1,800 an ounce at week’s end for the first in three months. Gold closed up 0.9% or $1,560 to settle at $1,831 an ounce. Silver rose 6.1% last week after settling Friday at $27.477 an ounce.

US energy companies added oil and natural gas rigs for a second week in a row, as higher oil prices prompted more drillers to return to the field. Oil futures rose 2.1% last week for US West Texas crude, which ended up 0.3% on Friday at $64.90. Brent futures rose 2.7% for the week to settle at $68.28 a barrel.

Weekly Market Update – 3/05/21

European shares ended barely changed this week after a rise in Eurozone bond yields prompted investors to take profits at near record levels. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.38% lower. The major indexes posted mixed results: Germany’s Xetra DAX Index eased 0.94% and Italy’s FTSE MIB slipped 1.00%, while France’s CAC 40 advanced 0.18% and the UK’s FTSE 100 Index gained 0.45%.

Core eurozone bond yields trended higher amid concerns the U.S. Federal Reserve might consider tapering its bond buying program. Higher-than-expected German inflation data published also raised core yields. Yields in the UK and peripheral bond markets in the Eurozone also climbed higher, largely tracking movements in US Treasuries and core Eurozone bonds.

The major US indexes ended mostly lower, but the S&P 500, the Nasdaq Composite, and the S&P MidCap indexes all reached new highs before giving up their gains on Friday. Returns within and among sectors varied widely, as investors acted in response to a flood of first-quarter earnings reports, although an increase in oil prices to six-week highs provided a general boost to energy stocks.

Communication services shares outperformed within the S&P 500, aided by earnings and revenue beats from Facebook and Alphabet (Google). Technology stocks underperformed, weighed upon by a decline in Microsoft despite the company reporting earnings that surpassed consensus estimates. Health care shares were also weak, pulled lower by declines in several major drugmakers.

The solid economic data pushed the yield on the benchmark 10-year Treasury note higher for the week, but the generally pacifistic tone of Powell’s press conference on Wednesday seemed to help moderate the increase. (Bond prices and yields move in opposite directions.) Municipal bonds outperformed Treasuries for much of the week, helped by inadequate new supply. Demand was focused in shorter-term munis, however.

Japan’s stock markets ended up the week lower, with the Nikkei 225 Index down 0.72% and the broader TOPIX Index dropping 0.87%. Declines were notable on Friday, as some firms’ worse-than-expected earnings releases exerted downward pressure on markets. Investors also adjusted positions ahead of the continuation of the Golden Week holiday, which sees markets close May 3– 5. The yen weakened against the U.S. dollar, closing at JPY 108.9, while the yield on the 10-year Japanese government bond rose to 0.09%.

Chinese shares noted a weekly loss as the government’s continued crackdown on technology firms dampened buying sentiment. The large-cap CSI 300 Index declined 0.2%, while the Shanghai Composite Index shed 0.8%. In bond markets, the yield on China’s sovereign 10-year bond edged up 2 basis points to 3.20%.

April was a good month for commodities, even though the final day of the period– Friday, April 30– wasn’t so good with small falls across the board. Gold dipped sightly on Friday to settle at $1768.70, still range bound and unable to sustain a move back above $1,700 an ounce. After closing in on a record on Thursday, three-month copper’s turned lower on Friday on the London Metal Exchange to close at $9,825 a tonne, down $60 from Thursday. The red metal did reach $10,008 per tonne on Thursday, closing in on the all-time high of $10,190 per tonne from February 2011.

In oil markets, Brent crude futures settled down $1.30, or 1.9%, at $67.26 a barrel on Friday, while US West Texas Intermediate (WTI) crude futures settled down $1.47, or 2.26%, at $3.54 per barrel. Brent gained 1.7% over the week, and WTI rose 2.3%. While WTI and Brent saw their biggest daily drops in more than three weeks, they also saw monthly gains of near 6% and 8%, respectively.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

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

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Weekly Market Update – 26/04/21

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%.

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

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Weekly Market Update 19/04/21

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).

Weekly Market Update

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.

Market Update 5/4/21

Europe’s shares climbed to near record highs in a short trading week, confident about a rapid economic recovery. (Markets closed on Friday in recognition of the Good Friday holiday). Expectations for U.S. infrastructure spending helped minimise concerns of a longer than expected lockdown on the Continent. In local currency terms, the pan-European STOXX Europe 600 Index ended 2% higher. France’s CAC 40 Index and Italy’s FTSE MIB made similar gains, while Germany’s Xetra DAX Index rose about 3.0%. The UK’s FTSE 100 Index was little changed.

Core eurozone government bond yields ended higher overall. They rose early in the week with U.S Treasuries, which sold off on expectations of more U.S. fiscal stimulus and U.S. vaccination progress. However, surging coronavirus cases in Europe amid vaccine rollout challenges and widened lockdown measures in some countries, including France, drove demand for core bonds, causing yields to fall midweek onward. They were pushed lower after European Central Bank President Christine Lagarde said the end of the Pandemic Emergency Purchase Programme is “not set in stone.” Peripheral government bond yields largely tracked core markets. UK gilt yields rose primarily due to the sell-off in U.S. Treasuries, the efficient vaccine rollout in the UK, and the easing of restrictions in England.

The major US benchmarks closed higher for the holiday-shortened trading week. The large-cap S&P 500 Index made news on Thursday for crossing the 4,000 threshold for the first time, and the S&P MidCap 400 Index also set a new intraday record. The technology-heavy Nasdaq Composite index led the advance, however, helped by gains in a wide range of semiconductor and hardware stocks, as well as a rally on Facebook shares. The consumer staples and materials sectors lagged within the S&P 500. Relatedly, growth stocks widely outperformed value shares for the first time since January.

The jobless claims data seemed to drive a decline in the yield on the benchmark 10-year U.S. Treasury note at the end of the trading week. (Bond prices and yields move in opposite directions.) Municipal bonds continued to outperform Treasuries for much of the week, as the technical tailwinds of muted supply and strong cash flows remained intact.

Japanese markets were also buoyed late by technology stocks, mirroring gains on the tech-heavy Nasdaq index. The benchmark Nikkei 225 Stock Average finished ahead 0.7% for the week through Thursday, while the broader TOPIX closed approximately 1% lower. A spike in U.S. Treasury yields saw the U.S. dollar climb to a one-year high against the yen on Wednesday and, at Thursday’s close, the USD was trading in the high JPY 110 range.

Chinese equities were strong ahead of a long weekend, with sentiment buoyed by the news of an additional tax reduction of RMB 550 billion to consolidate the economic recovery, strong March purchasing manager’s index data, and the better tone of U.S. and global markets. From the previous Friday to Thursday, April 1, the CSI 300 and Shanghai Composite each rose by 1.4%. In the bond markets, yields were flat over the week, with the 10-year sovereign bond yielding 3.22%. FTSE Russell confirmed the inclusion of Chinese central government bonds (CGBs) in its WGBI global bond index, with a 36-month phase in from the end of September 2021.

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. Brent futures rose $2.62, to settle at $69.36 a barrel. WTI crude rose $2.26 for the week, Brent was up 5.2%, rising for a seventh week in a row for the first time since December, while WTI was up about 7.4% after gaining almost 4% last week.

Gold finished the week under $1,700 an ounce and at a 9-month low and is now more than $290 an ounce under its all-time high of $2.089 last August. Silver fell as well, following gold lower but suffering a larger, 0.65% drop to end the week at $25.295. Silver shed 5.6% in value over a rough week.

Market Update 29/3/21

Shares in Europe rose on hopes of an economic recovery, turning around previous losses resulting from concerns about added restrictions to curb the spread of the coronavirus and the European Commission’s (EC) threat to stop vaccine exports. In local currency terms, the pan-European STOXX Europe 600 Index added 0.85%. Major stock indexes were mixed: France’s CAC 40 ended the week down modestly, while Italy’s FTSE MIB, Germany’s Xetra DAX Index, and the UK’s FTSE 100 Index posted gains. Elsewhere, UK inflation took a surprise dip and one of the world’s biggest container ships blocked a major trade route, the Suez Canal.

Core and peripheral eurozone government bond yields fell over all. Concerns over Europe’s sluggish vaccine rollout amid the onset of a fresh wave of coronavirus infections drove demand for high-quality government bonds. Data showing an EUR 7.1 billion increase in the European Central Bank’s weekly bond purchases also weighed on yields. Gilt’s yields fell on worries the EC could block vaccine exports to the UK, potentially slowing down the country’s vaccination campaign. Weaker inflation data, which pushed out expectations of the Bank of England to tighten up its monetary policy, also led to lower yields.

The major US indexes have been mixed for the week, as investors seem to continue to weigh a positive outlook about reopening against inflation and interest rate concerns. Small-cap stocks lagged for the second consecutive week, signalling a potential pause or turn around in their recent market position. Likewise, communication services stocks fared worst within the S&P 500 Index, dragged down by sharp declines in shares of several traditional media companies following a stretch of strong performance.

Inflation data – perhaps at the top of the list of current investor concerns – remain muted. The personal consumption index (excluding food and energy) increased by 1.4% year-on-year in February, down from 1.5% in January and still well below the Federal Reserve’s 2% target. On Wednesday, both Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen testified before Congress that they saw little danger of an overheating economy.

The yield on the 10-year U.S. Treasury notes fell much of the week, but seemed to rise in response to Thursday’s claims data. Stability in the yield of the notes boosted the performance of high yield bonds. However, the asset class experienced some weakness due to growing virus concerns throughout Europe.

Japan’s stock markets suffered considerable losses, even though they were able to recover some lost ground later in the week. The Nikkei 225 Stock Average fell 2.1% while the broader TOPIX gave up 1.4%. The yen weakened, closing at just below JPY 110 compared to the US dollar. The yield of the 10-year Japanese government bond ended up the week lower, at 0.08%.

Chinese stocks recorded a weekly gain, thanks to a rally on Friday after the country’s central bank signalled it was not about to tighten monetary policy. The Shanghai Stock Exchange Composite (SSEC) Index rose 0.4% to 3418.3, while the large-cap CSI 300 Index ended up 0.6% at 5038.0, its first weekly gain after five straight weeks of losses. Since reaching a record high on February 18, the CSI 300 has fallen 15%, while the SSEC is 8% below a 5 1/2- year high also touched on February 18. In China’s bond markets, the yield on the sovereign 10-year bond closed at 3.22%, off four basis points from the previous week, amidst expectations that monetary policy would remain supportive in the near term.

The fiasco in the Suez Canal reigned over commodity markets last week and will do so this week as oil prices kicked higher again on Friday, copper and gold rose, as did iron ore. The Suez blockage saw US West Texas Intermediate crude rise 4.1% to $US60.97 a barrel on Friday while Brent crude in Europe was up 4.04% a barrel to $US64.43. But for the week WTI fell 1.1% and Brent eased 0.4%. Gold rose 0.4% to $US1,732.30 on Friday, but shed 0.5% for the week for the first negative week in the last three.

Weekly Market Update 19/03/21

Shares in Europe have changed little in the last week. Even though central banks maintained their policy to stand behind an economic recovery, worries about a revival in coronavirus infections in some countries have limited the upside. In local currency terms, the pan-European STOXX Europe 600 Index ended the week approximately flat. Major European indexes were mixed. Germany’s Xetra DAX Index gained 0.82%, while Italy’s FTSE MIB Index advanced 0.36%. However, France’s CAC 40 Index fell 0.80%, and the UK’s FTSE 100 Index fell 0.61%.

Core eurozone bond yields ended a little higher. Germany’s 10-year bund yield climbed midweek, tracking U.S. Treasuries in response to expectations for an uptick in inflation. Yields eased somewhat on Friday on worries about the escalating number of coronavirus infections in Europe and consequent constraints on economic activity. Outer eurozone yields largely tracked core markets. UK gilt yields also increased, lifted in part by the Bank of England’s (BoE) positive tone relating to the economic outlook and its decision to keep interest rates the same.

The BoE’s policymakers unanimously voted to keep the benchmark interest rate at a record low of 0.1% and to carry on its existing bond buying program. The central bank said that global economic developments “had been a little stronger than anticipated” last month and indicated the U.S. fiscal stimulus package should provide “significant additional support.” It said bond yields had increased to demonstrate the stronger recovery while observing that the prices of risk assets had held up.

The Bank of France (BoF) increased its 2021 forecast for economic growth to 5.4% from 4.8% and said that activity at the end of last year held up better than predicted. The new projections may prove conservative, as they assume coronavirus constraints remain through the first half of 2021.

The major US indexes continued to move to record highs early in the week but then lost ground as bond yields reached their highest levels in over a year. Energy stocks fell sharply as oil prices saw their biggest daily drop since the summer, seemingly driven by rising U.S. inventories and demand worries due to renewed lockdowns and the slow vaccine rollout in Europe. The increase in yields read well for banks’ lending margins and supported financial shares for most of the week, but the sector fell back on Friday soon after the Federal Reserve announced it was not extending an exemption put in place early in the pandemic that allowed banks to hold lower capital reserves. The small-cap Russell 2000 Index fell the most, giving back some of its leadership for the year to date.

The equity rally stalled on Tuesday morning after longer-term Treasury yields resumed their rise– over the next two trading days, the yield on the benchmark 10-year note soared roughly 17 basis points (0.17%) and hit a new pandemic-era high of around 1.75% before retreating slightly.

The performance of Japan’s stock markets was mixed over the week. The Bank of Japan’s (BoJ’s) announcement, it will limit its purchases of exchange-traded funds (ETFs) to those tracking the TOPIX, contributing to the index’s 3.13% gain. The Nikkei 225 Stock Average underperformed, returning 0.25%. The yen strengthened slightly, closing at just below JPY 109 versus the U.S. dollar. The yield of the 10-year Japanese government bond finished the week at 0.11%.

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 of talks at the US-China meeting in Alaska, with each side criticising the other. The yield on China’s 10-year bond rose after the release of strong economic data for January and February, but fell on Friday to 3.26%, unchanged from the previous week.

In commodities, oil rose by more than 2% in volatile trading on Friday and ended the week by about 7%, the biggest weekly decline since October. Friday saw Brent Crude settle up $US1.25 a barrel, or 2%, at $US64.53 a barrel while in the US West Texas Intermediate (WTI) crude rose $US1.42, or 2.4%, to $US61.42.

Gold and copper rose on Friday as the US dollar weakened slightly in the wake of a fall in bond yields. Gold rose 1% over the week after a solid session on Friday (up around 1.4%) with the price settling at $US1,740.70 and then rising further in after hours trading to end the week at $US1,744.50.

Copper rose by around 0.11% to end at $US4.11 a pound and fell nearly 1.3% for the week while silver eased at the end to finish the week at $US26.335 an ounce, up around 1.3% over the five days.

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