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.