Week from 29 March to 4 April 2021
Though many investors enjoyed a holiday-shortened week, Wall Street jumped as big tech rallied. Facebook rose +5.53%, Google was up +5.02%. Microsoft gained +2.48% after winning a $22 billion contract to supply U.S. Army combat troops with its virtual reality headsets.
The economic backdrop continues to spur investor optimism. U.S. manufacturing activity expanded for the tenth month in a row in March, with the ISM Manufacturing PMI rising to 64.7 (highest level since 1983!). Nonfarm payrolls in the U.S. surged by 916,000, beating analysts’ expectations. Moreover, the unemployment rate fell to 6%. Last but not least, the country seems to be on the path of recovery from the Covid-19 pandemic. About 104 million adults have already received at least one shot and almost 60 million are now fully vaccinated.
Wall Street Propels International Stocks Higher
Almost every major equity index across APAC, Europe, and the U.S. started the new quarter on a positive note. The Dow Jones Industrial Average edged up 80.33 points, or +0.24% week-over-week, to 33,153.21. The S&P 500 was up +1.14%, closing above the 4,000 level for the first time ever. The tech-heavy Nasdaq rebounded too (+2.60%), offsetting the losses suffered over the last two weeks. Small cap stocks followed suit (Russell 2000 up +1.46%).
On the other side of the Atlantic, the MSCI EMU rose +1.76% while the FSTE 100 was treading water (-0.05%) in the aftermath of Europe’s biggest IPO of the year (Deliveroo). The food-delivery company’s shares sunk 31% on the first day of dealing. It is a real nightmare for the 70,000 customers who had backed this IPO.
Asian markets flashed green. The Nikkei 225 was up +2.32% and the Shanghai Composite was not far behind (+1.93%).
Among the S&P sectors, communication services recouped the losses posted last week (+3.39%). Consumer discretionary stocks (+2.17%), alongside with tech (+2.12%), also played a role in pushing the broader market to record highs. By contrast, several sectors finished the week in negative territory or close to zero. Consumer staples (-0.83%), health care (-0.59%), materials (-0.25%) and energy (-0.39%) gave back some of last week’s gains. The freeing of the container ship, that had blocked traffic at the Suez Canal, alleviated upward pressure on oil prices (WTI crude up +0.79%). Financials also struggled (+0.15%) on fears of exposure following the collapse of Archegos Capital Management.
Credit Markets Show Signs of Stabilizing
Investor sentiment in credit markets continued to improve though U.S. bond yields ticked higher. Thus, the 10-year Treasury rate inched to 1.72%. Corporate investment grade bonds (+0.08% in Europe, +0.21% in the U.S.) and high-yield bonds (+0.21% in Europe, +0.50% in the U.S.) extended last week’s gains. Emerging debt broke its losing streak (+0.14% in local currencies) but its year-to-date performance remains in the red (-6.61%).
Elsewhere, higher U.S. interest rates have raised fresh pressure on gold. The spot price declined by 0.22% to $1,728.87/oz. In the same vein, the EUR-USD pair also weakened (-0.33%) as the differential between German Bund and U.S. Treasury yields has widened further. The 10-year spread is now greater than 200bps.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2021-04-02/global
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