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).