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.