Weekly Market Update: Improving Economic Outlook and Falling Volatility Support Equity Markets

Mon 08 Feb 2021

Market Update

Global equities rebounded from their sharp sell-off last week, rising +4.0% in Sterling terms. US equities were some of the best performing, rising +4.5% and more than recovering the previous week’s losses in spite of weaker than anticipated labour market data. UK equities rose +1.3%, the worst performing major region. Energy particularly struggled, in spite of rising oil prices, as UK energy giants BP posted its first annual loss in a decade, while Royal Dutch Shell profits fell 71%. European equities rose +2.8%. Emerging Market equities fared best, up +4.8%, reverting back to their trend of equity leadership in 2021. Globally, all sectors were positive with the Technology sector the strongest. Sterling rose +0.2% and +1.0% against the US Dollar and Euro respectively, continuing its strengthening trend this year. The US 10Y yield rose 9.8bps to 1.16%, while the UK 10Y rose 15.5bps to 0.38%. Gold fell -2.0% on the week, while Oil rose +8.7%.

CIO Analysis

Last week saw US stocks breaking new highs again, as Wall Street easily brushed off the collapse of the “Great 2021 Reddit Rebellion” and focused on the likely $1.9tn US stimulus package. For all the publicity around Gamestop and other “short-squeezed” stocks, it should not come as a surprise that, in a market almost completely driven by monetary and fiscal expansion, the collapse in the price of a few smaller cap stocks had zero contagion effects.

However, expanded stimulus is but one side of the coin, with the other being the course of the Covid-19 pandemic. While the imagery of a “light at the end of the tunnel” might invoke thoughts of trains – which run on a fixed trajectory – the truth is that the road out of the pandemic is rife with twists and turns. 2020 might have been the year of “surprise” and “caution” but 2021 is the year of the actual “fight”. That humankind will eventually beat the pandemic is more or less the highly likely outcome, based on all historic evidence. What is less predetermined, however, is how long the battle will take and what sort of “new normal” will emerge after it. Certainly the more the war rages, the more permanent the scars.

The optimism-pessimism scale is oscillating fast. On the one hand, since the beginning of the year we have seen breakthroughs in medicines to effectively treat the infection. On the other, some early studies have suggested that certain vaccines might be less effective against some mutations. Meanwhile, the more the virus is running rampant and grossly underreported in many emerging economies, the higher the probability of developing strains that are resistant to vaccines we have already developed.

The main risk for markets is a setback in treatment and prevention efficiencies which would prolong lockdowns and curb international travel for key global economies. We believe that there’s ample room for more enhanced international coordination and strategic planning. Evidence of that happening could constitute a significant catalyst for markets to cheer, as economies and corporate earnings would be given the chance to catch up to present valuations within the year. We also monitor stimulus remaining well ahead of the worst aspects of the economic downturn. The expanded $1.9tn package in the US is certainly welcome news. The question is whether other nations, who don’t have the benefits of borrowing in the global reserve currency, will be able to follow suit. Or, whether record-debt levels will induce policy makers to withdraw some of the pandemic-related economic safety nets before the defeat of the virus is assured.

David Baker, CIO

Weekly Market Update: Caveat Emptor

UK equities reached the highest level in over a year as part of a broad-based rally in equities globally. Equity markets continue to benefit from increasing risk appetite as investors become increasingly bullish on a 2021 recovery. UK equities rose +1.6%, although it remains one of just a few regions not back to all time highs.US equities rose +0.7% in Sterling terms, the stronger growth moderated by Sterling rising +0.9% against the US Dollar. Globally the best performing sector was materials, whilst telecoms lagged other sectors. The US 10Y yield fell 7.9 bps to 1.6%. The UK 10Y yield was more or less unchanged, down just 1.0 bps to 0.8%. Gold rose +1.1% on the week, although it remains -7.6% so far this year. Oil rose +5.7% last week to $63.1 a barrel. Oil is up +28.5% this year. The jump in oil prices comes in spite of global coronavirus cases beginning to rise in many regions, with several European and Asian economies looking likely to increase the stringency of lockdowns.

Weekly Market Update: Vaccine and Stimulus Sentiment Help Equities to Set New Highs

With the exceptions of the UK and Japan, equity markets were positive last week. Technology stocks performed particularly well in the US where Netflix was boosted by a larger than expected subscriber gain during the pandemic. US equities, up +1.4%, were supported by political tailwinds, with substantial stimulus expected under the new Biden administration. UK equities fell -0.6% due partly to Sterling strength, as a large portion of the index’s earnings are overseas, and Oil weakness. Globally, Telecoms and IT led whilst Financials and Energy lagged. Emerging Market equities continued their strong start to the year up +2.0% to a +7.7% rise year-to-date. The US 10Y was largely unchanged, the yield up 0.2bps to 1.086%. The UK 10Y rose +2.0bps to 0.31% on positive vaccine news and improved sentiment about the economic outlook in UK PMI data. Gold rose +0.9% on the week whilst Oil fell -0.7% to US $52.7.

Weekly Market Update: Mixed Results in Equity Markets as Economies Reopen but US Jobs Disappoint

With many regions operating a shortened trading week, returns varied significantly across major equity markets. UK equities provided the best returns to Sterling investors, up +2.4%. The rise in UK equities was helped in part by rising commodity prices, with miners and energy firms benefiting from rising metal and oil prices. European equities provided the next best returns, up +1.7% in Sterling terms. US equities rose a modest +0.2% in Sterling terms, though up +1.3% in local currency terms, as the rotation from growth to value impacted returns. Emerging markets fell -1.0% in Sterling terms. Japanese equities rose +1.3% in Sterling terms, not quite enough to move the region into positive territory year-to-date. The US 10Y yield fell temporarily on bad jobs data, although recovered somewhat, ending down 4.9bps to 1.6%, while the UK 10Y fell 6.7bps to 0.8%. Gold rose +2.4% on the week, while oil rose a further +1.0% to $65.4.

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Weekly Market Update: Bonds Sell Off Spills Over to Wider Market

A significant rise in US Treasury yields unsettled markets last week. US equities fell -1.9% in Sterling terms, with Tech stocks suffering their worst week in nearly six months. UK equities fell -1.9%, with Energy and Financials the only two positive sectors for the week. Emerging Markets suffered the greatest sell-off, having led global equity markets so far this year. UK and Emerging Markets are the only major equity markets still positive for the year in Sterling terms. Globally the only positive sector was Energy which was supported by rising oil prices. Investors will keep a keen eye on the OPEC+ meeting this week for any indication of increased oil supply. Japanese equities fell -2.4% in Sterling terms, the worst performing region year-to-date for UK investors. The US 10Y yield continued its rise, up 6.9 bps to 1.4%, at one point hitting 1.6%, and the UK 10Y rose 12.2 bps to 0.8%. Long-term yields are now trading at their highest level since the pandemic. Gold fell -2.3% on the week, while Oil rose +4.4% to $62.7.

Weekly Market Update: Markets Rally for Second Week as Inflation Expectations Return

Global equities continued last week’s gains, rising +0.7% in Sterling terms. UK equities, amongst the top performing major markets, rose by +1.6%. They were supported by rising oil prices and positive returns from energy companies, as the domestic market is overweight to the Energy sector. European equities, amid high volatility, were up +0.8%, due to improved coronavirus infection rates and hopes of a large U.S. economic stimulus. US equities rose +0.4%, the worst performing major region. Globally, Energy was the best performing sector whilst Utilities and Cons. Discretionary were the only sectors to finish the week down. Emerging Markets maintained their strong performance since the start of the year, posting gains of +1.5%. Sterling rose +0.8% and +0.3% against the US Dollar and Euro respectively, continuing its strengthening trend this year. The US 10Y yield rose 4.5bps to 1.2% and the UK 10Y rose 3.5bps to 0.52%. Gold fell -2.0% on the week, while Oil rose +3.7%.

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Global equity markets were down last week amid delayed growth recovery expectations. US equities fell -3.5% in Sterling terms, with volume skyrocketing mid-week to a record high of 23 billion share transactions as market attention centred on retail investors purchasing highly shorted stocks. UK equities fell -4.3% due, in part, to Energy underperforming other sectors. European equities fell -3.5% amid fear of a slowdown due to the pandemic, and delays in the distributions of vaccines. Emerging Market equities fared worst, down -4.7%, bucking a trend of strong performance since the start of the year. Globally, all sectors were down with the Energy sector performing the worst. Sterling strengthened up +0.2% and +0.4% against the US Dollar and Euro respectively. The US 10Y was down 2bps to 1.07%, while the UK 10Y rose 1.9bps to 0.33%. Gold fell -0.6% on the week whilst Oil fell -0.3%.

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Equity markets ended the week largely unchanged, with the largest movements seen in Japanese and UK stocks. UK equities fell -1.1%, driven in part by a falling oil price, as the global economic outlook increasingly uncertain, with clear inequality in the vaccination progress between regions, dampening expected demand for oil. US equities fell -0.3% in Sterling terms, with plans to raise capital gains tax only making a slight impact on US markets. European equities rose +0.2% in Sterling terms due to currency effects, having fallen -0.4% in local currency terms. Emerging markets were the only risers in local currency terms, and were up +0.1% in Sterling terms. Globally the best performing sector was healthcare, whilst energy was the worst performing. The US 10Y yield fell slightly by 2.2 bps to 1.6%, while the UK 10Y fell 2 bps to 0.7%. Gold fell -0.2% on the week. Oil fell as the economic outlook deteriorated, down -1.7% on the week to $62.1.

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Once again many major equity markets finished the week not far from where they started. Market attention was squarely focused on the Federal Reserve, where chairman Jerome Powell promised not to raise rates in the near term; as a consequence, markets did not sharply react in either direction. US equities were flat in US Dollar terms, but up +0.2% in Sterling terms. UK equities were the best performing region, up +0.5% last week. European equities fell for the second consecutive week, down -0.8% in Sterling terms. Emerging markets fell -0.2% in Sterling terms. Japan was the clear laggard, where earnings failed to meet expectations and the Bank of Japan kept policy unchanged. Japanese equities fell -1.9% in Sterling terms. The US 10Y yield rose on improved economic data, up 6.8bps to 1.6%, while the UK 10Y rose 9.8bps to 0.8%. Gold fell -0.3% on the week. The better than expected economic data helped oil to rise +2.4% last week to $64.4.

Weekly Market Update: US Inflation Unnerves Equity Markets

Global economies are reopening, and moving into the recovery phase, this pickup in activity has lead investors to question the potential impact on inflation. Investors are cautious of whether inflationary effects will be transitory or long-lasting. The US inflation reading unnerved markets and all major equity markets fell last week. US equities fell -2.2% in Sterling terms, partly driven by currency effects, markets had sold off sharply at the start of the week before recovering in the latter half. UK equities, which typically move inversely to Sterling, due to high levels of overseas earnings, fell -1.2%. Japanese equities fared worst last week, caught in global equity volatility and increased lockdowns, falling -4.0% last week. Despite strong Chinese equity performance, emerging market equities fell -3.8% in Sterling terms. The US 10Y yield rose 5.1bps to 1.6%, while the UK 10Y rose 8.2bps to 0.9%. Both gold and oil were nearly unchanged, falling -0.2% and -0.1% on the week respectively.

Weekly Market Update: Markets Grapple With Eventual Tapering of Asset Purchases

In a relatively volatile week of equity market trading, ultimately most major equity markets ended nearly unchanged. Following on from US inflation last week, there was increased focus on the UK and EU readings this week, with investors looking for any evidence of a potential shift in monetary policy. US equities fell most of major equity markets for British investors, down -0.7% in Sterling terms, although more modestly in local currency terms. UK equities ended a mixed week down -0.2% as the effects of stronger than anticipated labour market data and inflation played out. Emerging markets and Japanese equities saw a role reversal last week as they moved from laggards to leading markets, with emerging market equities providing the best returns to Sterling investors up +1.4% on the week. European equities rose +0.6% in Sterling terms. The US 10Y yield fell -0.7bps to 1.6%, while the UK 10Y fell -2.7bps to 0.8%. In commodity markets, gold rose +1.7%, while oil fell -2.9% to $64.1 a barrell.

Weekly Market Update: Rational Exuberance

Markets opened positively this week thanks to the impact of stronger than anticipated US payrolls data released over the bank holiday. Meanwhile, the EU vaccination campaign is finally beginning to pick up pace. US equities rose +3.4% in Sterling terms, reaching further record highs. UK equities rose +2.7% in the final week before the second phase of lockdown easing. European equities rose +3.2% in Sterling terms, supported by the increased likelihood of fiscal stimulus in the region. Emerging market equities fell in local currency terms, but gained +0.1% in Sterling terms. Globally, the best performing sector was information technology, whilst energy was the worst performing. The US 10Y treasury yield fell slightly down 6.3 bps to 1.7%, while the UK 10Y gilt yield fell 2.1 bps to 0.8%. Gold rose +1.6% last week. Oil fell for the second week, down -2.8% to $59. Oil has fallen almost -20% from its earlier surge, driven partly by a more challenging route out of the pandemic than originally forecast.

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Both US equities and the US Dollar fell last week when multinational companies such as Boeing were hit as Donald Trump sought to impose new tariffs on China, pressing China to cut its trade surplus with the US by $10bn. As a result, there is an increased likelihood of a trade war between the worlds […]

Weekly Market Overview – Despite scheduled talks, looming trade war roils markets

Donald Trump’s announcement of around $60bn of tariffs against China due to intellectual property violations saw markets experience large losses, as participants feared an escalating trade war. China is expected to hit back with levies aimed at industries and states where Mr Trump’s supporters are concentrated. Equity falls came despite Congress agreeing a $1.3tn spending […]

Weekly Market Overview – Markets shrug off US strikes on Syria

Markets were volatile last week due to the possibility of air strikes on Syria, however opened slightly up on Monday morning after the US took action over the weekend. Equity markets were positive across the board in local terms last week, however Emerging Market and Japanese equities posted losses in GBP terms as the Pound […]

European Risks Primer: Richlandia and Poorlandia

The article was originally published in the Money Observer on the 20th July 2018 The potential breakup of the Euro has been a permanently armed grenade under the bed of the global economy for almost two decades. The recent Italian elections driving yields up and the Euro down reminded allocators that European risks have never […]

Mazars Wealth Management Quarterly Investment Outlook Q2 2018: The new “new normal”

Read our full MWM Quarterly Investment Outlook Q2 2018 The first quarter of 2018 saw a return of market volatility and a reversal of gains from the end of 2017. Despite a strong January, global equities finished the quarter down 2.1% in local currency terms, but 4.7% for UK investors as the Pound continue to […]

Mazars Wealth Management Investment Newsletter April 2018

Read our full MWM Newsletter April 2018 The first quarter of 2018 saw a return of market volatility and a reversal of gains from the end of 2017. Despite a strong January, global equities finished the quarter down 2.1% in local currency terms, but down 4.7% for UK investors as the Pound continued to strengthen, […]

Mazars Weekly Market Update: Apple sours market recovery

Read our full Market Update Week 16 Market Update Equity markets saw another week of recovery with positive returns across all regions. Returns for UK investors were boosted by a weak return from Sterling, which sold off 1.75% on a trade weighted basis as Mark Carney, the Governor of the Bank of England, made comments […]

Mazars Weekly Market Update: Weak UK growth sees Sterling sell-off

Read our full Market Update Week 17 Market Update Global equity markets were flat to positive in local terms last week, however a large sell-off in Sterling due to fading expectations for a rate hike at the next MPC meeting in May meant that returns were positive for UK investors. Global equities returned 1.6%, US […]

Monthly Market Update: New Equity Highs as Economies Tread Water

Markets welcomed signs of an easing in geopolitical tensions in October, with risk assets generally outperforming traditional safe havens. The US and Chinese authorities moved closer to agreeing a partial deal on trade, while the UK once again edged back from the precipice of a no-deal Brexit. Global central banks reiterated their dovish stances and […]

Weekly Market Update: Markets shrug off US G7 communique snub

Read our full Market Update Week 23 Market Update Last week markets were back in risk-on mode, as Global equities gained +0.9% in Sterling terms, led by US stocks which were up +1.2%. The gains were fairly evenly dispersed amongst sectors, although Utilities were the main loser as Treasury yields crept higher. Japanese equities were […]

Weekly Market Update: Oil spikes as US inflation hits Fed target

Read our full Market Update Week 26 Market Update Global equities saw a second straight week of negative performance, down -0.7% in Sterling terms, with all major indices experiencing falls in both local and GBP terms. Once again escalating trade tensions were the prime reason for weak performance, although for the second week running UK stocks […]

Mazars Wealth Management Investment Newsletter July 2018

Read our full MWM Newsletter July 2018 Global economic growth continued in the second quarter of 2018, albeit in a much less broad based fashion than in Q1. The US economy led the way buoyed by high levels of business and consumer optimism, whilst Europe, and in particular France grew more slowly. Growth in the […]

Weekly Market Update: Global stocks up heading into earnings season

Read our full Market Update Week 28 Market Update Global markets were up last week by +1.4%, despite a mid-week blip as once again Donald Trump increased the stakes against China, threatening tariffs on $200bn worth of exports. US stocks were up +1.9% in Sterling terms, however Emerging Market equities gained the most, up +2.0%. […]

Weekly Market Update: Italian populist government calms markets, US populist tariffs re-ignite concerns

Read our full Market Update Week 22 Market Update Markets sold off and yields rose in the first half of the week on fears about repercussions of the Italian President rejecting the populist coalition’s choice of finance minister and attempting to install a technocrat government. There were concerns that a new set of elections would […]

WEEKLY MARKET UPDATE: VALUATIONS REMAIN HIGH

After several weeks of recovery, equities fell in all major regions last week. Due to weak Sterling, both US and Japanese equities were flat for UK investors. However European (-0.5%), UK (-0.5%) and Emerging Market (-1.1%) equities were all negative in Sterling terms. The Energy sector was the best performing globally, even though the outlook […]

Weekly Market Update: Markets Rattled by Iran Tensions

Read our full Market Update Market Update U.S. stocks declined modestly last week, after a sharp rally at year-end and a new record high on the first trading day of the year, as tensions rose between the US and Iran following an airstrike in Iraq that killed a prominent Iranian general. US equities were down […]

The latest position of the ECB

Christine Lagarde, President of the ECB, gave a press conference on 10 June following a meeting of the ECB’s governing council. Her speech contained some unequivocally positive observations about the European economy, lamenting a bounce back in services activity, continued strong manufacturing activity and improving consumer spending, all against a backdrop of strong global demand. […]

Weekly Market Update: Markets Mixed As Lockdowns Reimposed Over Second Wave Concerns

Market Update Global equities were narrowly down -0.3% on the week in local terms, however Sterling weakness once again boosted returns to British investors. The US was the best performing region, up +1.0% in Sterling terms. This coming week will kickstart earnings season in the US, where earnings are expected to fall sharply relative to […]

Weekly Market Update: European Lockdowns Weigh on Equity Markets

Market Update European equities sold-off as economic data begins to point towards a stalling recovery and coronavirus infection trends point towards tighter restrictions. European equities were down -1.4% in local currency terms, narrowing to a -1.2% loss in Sterling terms. UK stocks improved in the second half of the week, buoyed by increased employment support […]

Weekly Market Update: Likely Biden Victory Helps Equities to Best Week in Over Six Months

Market Update Global equities rallied last week with US stocks in particular posting their largest weekly gains since April as investors reacted to the increased possibility of a divided government, with a potential Biden win and continued Republican control of the Senate. In Sterling terms US stocks were up +5.6% while both UK and Global […]

Monthly Market Blueprint: If you are looking at the election, you might be looking in the wrong place.

Dear reader,This note was written mid-day on 3 November, just a few hours before the US presidential election result. Naturally, we were tempted to delay, to get a clearer view of the earth-shattering events surrounding the world’s biggest economy and longest standing democracy. However, we decided to consider that the US presidential election could be […]

Weekly Market Update: Covid-19 vaccine breakthrough fuels global equity rally

Market Update Global equities rallied strongly last week on news that early data shows Pfizer’s Covid-19 vaccine, one of many in development, is effective in 90% of cases. Equities rallied sharply in the first half of the week before ceding some of their gains later on as attention turned back to the near-term, where Covid-19 […]

Weekly Market Update: Brexit Tempers Vaccine Regulatory Headwinds

Market Update Like clockwork positive vaccine news, this time FDA confirmation of Pfizer/BioNTech results, buoyed markets in the early part of last week. However some of these gains were reversed due to the worsening condition of both Brexit and Covid-19 cases. UK equities were flat for the week, however more domestically exposed mid-caps fell as […]

Weekly Market Update: Major indices end the year on a positive note

Market Update Most major equity market indices ended the year on a positive note. Global stocks gained +0.2% in Sterling terms over the last two weeks of trading to close the year up +12.4% in Sterling terms. Over the year, due in large part to a Tech rally following the early pandemic crisis, US stocks […]

Weekly Market Update: Suez Canal Blockage Adds to Supply Chain Strains

Relative to the year so far, last week saw quite a heterogeneous response to news by markets. On one hand there is continued and growing positivity surrounding the opening of economies, but this has lead to some inflationary concerns. Meanwhile, the Suez Canal blockage raised concerns about supply chain disruptions. US equities rose +2.2% in Sterling terms, hitting record highs, helped by a more optimistic vaccine schedule from President Biden. UK equities rose a more modest +0.6%. Globally the best performing sectors were more defensive names such as consumer staples and utilities, whilst telecoms was once again the worst performing. Japanese equities fell -1.5%, moving back into contractionary territory this year. The US 10Y yield fell slightly, down 4.5bps to 1.7%, while the UK 10Y fell 8.1bps to 0.8%. Neither gold nor oil were much changed, both down -0.1% on the week, with oil trading just under $60 a barrel.

Weekly Market Update: Stocks Shrug Off Higher Inflation

Market Update Global markets were again positive for the week, although with global yields falling markedly, it was the growth and bond-proxy sectors which were positive, with healthcare and IT the standout gainers. Meanwhile cyclical stocks, which have seen upturned performance since the positive vaccine news in November, had a poor week. Financials, materials and […]

Weekly market update: stocks decline on fears of a second wave of covid and stimulus uncertainty

Read our full Market Update Week 39 Market Update Major global markets were negative in local currency terms, whilst a weaker Sterling which was down -1.3% for the week against the US Dollar and -0.4% against the Yen ensured some pockets of growth for British investors. US stocks moved into correction territory (down 10% from […]

Weekly market update: The Fed is not the answer to everything!

US, UK and European equities were relatively unchanged in Sterling terms last week, faring -0.1%, +0.1% and -0.1% respectively, amid concerns that the rate of global growth could start decelerating. Japanese equities were up +4.0% despite the resignation of Prime Minister Yoshihide Suga, while emerging market equities were up +2.7%, positive for a second week in a row after the Chinese tech sector had fallen significantly in previous weeks. Globally, stocks were up +0.3%, with energy and financials being the only sectors exhibiting losses. The US 10Y Treasury yield was down -1.5bps finishing the week at 1.322%. The German 10Y Bund yield was up +6.2bps amid higher than expected inflation in the euro area. Sterling was up +0.8% against the US Dollar and unchanged relative to the Euro. In US Dollar terms gold lost -0.1%, while oil prices rose slightly by +0.1%.

Weekly market update: How much longer can liquidity mask reality?

Global stocks were down -1.1% in Sterling terms last week amid fears of momentum fading and growth concerns due to the persistence of supply chain issues. Japanese stocks were the only region to post gains, rising by +3.8% in Sterling terms, buoyed by news of prime minister Suga stepping down and expectations of further stimulus. UK, US and European equities were all down -1.5% driven by inflation concerns and uncertainty about the economic outlook. Globally, all sectors exhibited losses apart from consumer discretionary. The US 10Y Treasury yields were up 1.7bps, finishing the week at 1.343%. German 10Y Bund yields were up +2.6bps to -0.332% after the ECB announced it would reduce the pace of its pandemic asset purchasing programme. Sterling fell against the US Dollar by -0.2% and rose by +0.4% vs the Euro. In US Dollar terms gold lost -2.1%, while oil was up by +0.7%.

Weekly Market Update: Reducing to equal weight

Equities in most major markets pulled back amid inflation worries, persistent supply side issues and more contractionary anticipated monetary policy - global stocks were down -1.6% in GBP terms. US stocks were down -1.2% as uncertainty loomed around the federal debt ceiling and the approval of the USD 1 trillion infrastructure bill. EU stocks were down -1.2% amid higher than expected inflation while UK stocks were down -0.3% despite an upward revision of latest GDP figures. Globally, Energy stocks continued their upward trend for another week in a row posting solid gains of +4.9%, with the rest of the sectors pulling back. The US 10Y Treasury yield was up 1.2bps finishing the week at 1.465%, while the UK 10Y yield was up 8.2bps reaching 1.00%. Sterling fell by -1.0% against the USD. In USD terms gold rose by +1.6%, while oil was up by +3.5%.

Weekly Market Update: Port congestion isn’t dealt with interest rate hikes

Equities in most major markets edged higher last week, partly offsetting the previous week’s losses, with global stocks up +0.3% in GBP terms. US stocks were up +0.4% despite the disappointing jobs report published on Friday. European stocks were up +0.2% amid high volatility while UK stocks were up +1.0% despite the BoE’s new Chief Economist raising the alarms on inflation’s persistence in the coming months. Globally, energy stocks outperformed all sectors for a fifth week in a row, posting solid gains of +4.9%, followed by financials, utilities and materials. The US 10Y Treasury yield was up 15.0bps, finishing the week at 1.612%, while the UK 10Y yield was up 15.6bps reaching 1.158%. Sterling rose by +0.5% against the US Dollar. In USD terms gold pulled back by -0.6%, while oil was up by +4.1%, reaching $81 per barrel.

Weekly Market Update: Look it’s China

Equities in most major markets posted gains last week with global stocks up +1.1% in Sterling terms, amid some improved economic figures. US stocks were up +0.8% as the earnings season kicked off strongly with major banks beating earnings expectations. EU stocks were up +1.6% despite a contraction in the industrial sector while UK stocks were up +2.0% amid strong macroeconomic data showing output growth during August. Globally, almost all sectors posted gains with cyclicals outperforming relatively versus more defensive stocks. The US 10Y Treasury yield was up 3.8bps finishing the week at 1.574%, while the UK 10Y yield was up 5.6bps reaching 1.105%. Sterling rose by +1.0% against the US Dollar. In USD terms gold pulled back by -0.4%, while oil was up by +2.5% reaching $82 per barrel.

Weekly Market Update: Santa rally, or not, we remain equal weight

Equities in most major markets posted gains last week with global stocks up +1.4% in Sterling terms, amid stronger investor sentiment. US stocks were up +1.7% as positive earnings surprises continued for a second week in a row. EU stocks were up +1.2% despite heightened concerns that a rate hike could come sooner than expected, while UK stocks were down -0.4% as the latest inflation readings remained above the BoE’s 2% target. Globally, most sectors posted gains with healthcare and utilities being the best performing, while materials and telecoms underperformed. The US 10Y Treasury yield was up 6.2bps finishing the week at 1.632%, while the UK 10Y yield was up 3.9bps reaching 1.145%. Sterling remained flat against the US Dollar. In US Dollar terms gold was up +1.4%, while oil was up +2.9% reaching $84 per barrel.

Weekly Market Update: Was it a good idea for the BoE to surprise markets? Probably not.

Equities in most major markets posted gains last week with global stocks up +3.3% in Sterling terms, amid continued strong investor sentiment. US stocks were up +2.0% on the back of positive earnings surprises, a dovish Fed meeting and strong employment data. EU stocks were up +3.2%, with the ECB insisting that rates will stay low for the near future. UK stocks were up +1.0% as the BoE unexpectedly kept interest rates unchanged, which caused Sterling to fall -1.4% against the US Dollar. Globally, consumer discretionary and IT were the best performing sectors while financials and healthcare were the worst performing. The US 10Y Treasury yield was down 10.6bps finishing the week at 1.455%, while the UK 10Y yield was down 19.0bps reaching 0.845%. In US Dollar terms gold was up +3.4%, while oil was down -1.3% to $81.2 per barrel.

Weekly Market Update: Operations Managers are the new economists

Equities in most major markets posted minor gains last week with global stocks up +0.3% in Sterling terms, as inflation concerns seem to have stemmed a previously strong investor sentiment. US stocks were up +0.2% as multi-year high inflation data offset positive news on employment data. EU stocks were up +0.2%, despite Covid-19 cases surging in most countries in the region. UK stocks were up +0.7% while EM equities rose by +2.2%, driven by China’s announcement that it would propose easing measures to aid indebted real estate firms. The US 10Y Treasury yield was up 11.0bps finishing the week at 1.561%, while the UK 10Y yield was up 6.9bps reaching 0.914%. In US Dollar terms gold posted solid gains for the second week in a row, up +3.1%, while oil was down -0.1% to $80.4 per barrel.

Quarterly Investment Newsletter Autumn 2020

Global stock markets built on the astonishing rebound from the Spring to post further, albeit more modest, gains during the third quarter of the year. Global stocks rose by nearly 5% in Sterling terms. That said, again the rises were far from uniform geographically, with US and Japanese equities posting strong returns whilst Europe struggled to a marginal positive return and UK equities lost further ground. Aside from Equities, Gold started the quarter strongly, but then sold off in early August as safe haven assets including the US Dollar retracted in less volatile markets.

Weekly Market Update: Stocks edge higher, bolstered by stumbling sterling

Read our full Market Update Week 37 Market Update Globally stocks were negative in local terms, losing -1.3% for the week. However Sterling weakness, which saw it worst week since March, saw global stocks rise +2.2% in Sterling terms. UK stocks performed well gaining +4.0% for the week, with Housebuilders and Healthcare both rising by […]

2020 a Year of Clarity?

Read our Full Monthly Market Update Global economic data is mixed. On the one hand, leading indicators and trade indices suggest that the global economic deceleration might be ending, and growth bottoming out, at least for this part of the cycle. On the other hand, manufacturing data persistently indicates contraction, especially in capital goods orders, […]

Monthly Market Blueprint April 2020

The month in review: March Market Meltdown Q1 2020 saw the worst quarter for risk assets since the Global Financial Crisis as the dual shock of the COVID-19 pandemic and the Saudi Arabia-Russia oil price war wiped out equity markets and pushed credit spreads higher. Capital fled to the sovereign bond market with Treasury yields […]

Q1 2020 Outlook

Read our Full Quarterly Outlook The Power of the Cycle John Kenneth Galbraith, an irreverent but brilliant economist best known for his work on the Great Crash of 1929, famously lamented about his own profession: “the only function of economic forecasting is to make astrology look respectable”. As always, we toyed with the idea that […]

Weekly Market Update: Stocks Steady on US Earnings Growth

Market Update Despite concerns about coronavirus continuing to dominate headlines, markets on the whole edged up last week, with global equities gaining +1.2% in local terms, which translated into a +0.1% gain for UK investors. The resignation of UK Chancellor Sajid Javid saw Sterling rise along with gilt yields. Javid’s replacement, Rishi Sunak, is expected […]

US 10 Year Yield at all time low in response to Coronavirus fears

Download our Full Market Update here Market Update Global stocks saw a sharp sell-off last week after COVID-19 cases spiked in Italy, Iran and South Korea, pushing recession fears higher and expected corporate earnings lower for 2020. Global stocks fell -9.4% in Sterling terms, with US equities experiencing the quickest correction since the Great Depression, […]

Weekly Market Update: Stock markets suffer record daily falls, central banks cut interest rates to combat coronavirus induced slowdown

Read our full Market Update Week 11 Market Update UK equities were down over 8% this morning, with the FTSE 100 down -32% over the last month as markets are now starting to price in a coronavirus induced global recession. Oil prices continued to slip, down nearly 50% YTD in USD terms. This fall has […]

Weekly Market Update: Monetary Policy Struggles to Support Markets

Read Our Full Market Update Market Update The market sell-off continued last week, despite government pledges of further fiscal support and central bank liquidity injections, as countries moved into lockdown and tightened border controls to contain the coronavirus outbreak. UK equities were down -3.2% with Housebuilders, Industrials and Energy companies experiencing the brunt of the […]

WEEKLY MARKET UPDATE: A MORE SANGUINE WEEK FOR MARKETS

By regular standards it was a rocky week for equities, which rallied 2-3% in the first few days, but fell 4-5% later on. However in comparison to preceding weeks market moves were somewhat muted, perhaps because the news-flow has provided little further clarity as to the time-scale and magnitude of the COVID-19 crisis – markets […]

WEEKLY MARKET UPDATE: IS THIS RALLY A “HEAD FAKE”?

Last week (Friday 3 to Monday 13 April) global stocks rose on the back of an improved narrative regarding the Coronavirus pandemic, as markets see a ‘flattening of the curves’ and a reduced pace of new infections, while many countries weigh reopening their economies. Boris Johnson’s survival helped improve the narrative both for the UK […]

Weekly Market Update: Nobody Wants Your Oil

Aside from UK equities, major equity market regions were positive in local currencies, boosted on Friday by reports that suggested a drug had shown positive results against COVID-19 in a clinical trial, as well as some relaxing, both planned and enacted, of restrictions in several countries. Sterling strength meant that some returns for UK investors […]

Weekly Market Update: Inflationary pressures may be moderating. Supply chain pressures aren’t.

Equities in most major markets posted losses last week with global stocks down -0.4% in Sterling terms, as inflation concerns, supply chain issues and rising coronavirus cases dampened investor sentiment. US stocks were up +0.1% with growth stocks exhibiting solid gains, outweighing the losses in more cyclical firms. European stocks were down -1.8%, as countries within the region started imposing restrictions to curb rising Covid-19 cases. UK stocks were down -1.6% amid CPI inflation figures hitting a ten-year high, while EM equities fell by -1.7%. The US 10Y Treasury yield was down 2.2bps finishing the week at 1.548%, while the UK 10Y yield was down 3.5bps reaching 0.880%. In US Dollar terms gold lost some of its previous weeks’ gains, down -1.3%, while oil was heavily down -6.2% to $76 per barrel.

Monthly Market Update: Positive markets and slow recovery

For the better part of the last three years the core of our investment policy has been simple: “Don’t fight the Fed”. As accomplished economist Mohammed El-Erian put it, Quantitative Easing is not the biggest game in town, it is rather the only game in town. Prices for risk assets are almost completely dependent on […]

WEEKLY MARKET UPDATE: US-CHINA RHETORIC UNNERVES MARKETS

Markets rallied throughout last week, however US equities closed lower on Friday and down -1.6% in Sterling terms for the week, with other regions following suit this morning, on concerns that tensions between the US and China could escalate due to accusations from the US administration over the origins of the Coronavirus. For the week, […]

WEEKLY MARKET UPDATE: EASING OF LOCKDOWN RESTRICTIONS BOOSTS EQUITIES

Equity markets continued to steadily recover last week, with all regions positive or flat in Sterling terms and only Emerging Market Equities down in local terms. Markets have been reacting positively to the gradual opening up of economies across the world, even with some signs that the Coronavirus is re-emerging in areas such as Wuhan […]

WEEKLY MARKET UPDATE: SECOND WAVE FEARS SEE MARKET JITTERS

Equity markets sold off across the board last week, declining initially amid fears of a secondary wave of infections and a pessimistic outlook from the Fed, although there was a sharp recovery later in the week on additional stimulus expectations. In local terms global equities fell -2.5%. However due to Sterling weakness, in part due […]

WEEKLY MARKET UPDATE: EQUITY STRENGTH DESPITE WEAK DATA

Hopes for a COVID-19 vaccine saw equity markets rally across the board last week, with global stocks up +2.8% in Sterling terms and +3.2% in local terms. EU equities led the way in Sterling terms, up +4.1%, with UK equities also experiencing strong returns of +3.4%. US equities gained +2.8%, although Emerging Market equities were […]

Weekly Market Update: Equity Momentum Continues

For a second week in a row it was green across the board for equities, as global stocks gained +2.4% in Sterling terms and +3.7% in local terms. European stocks were amongst the best performers for a second week, with Japanese equities performing equally well. Early in the week markets focused on the US returning […]

WEEKLY MARKET UPDATE: UPBEAT US JOBS FIGURES BOOST EQUITIES

Equities saw a third straight week of strong returns, with Japan the only region experiencing losses in Sterling terms (down -1.6%), although it was also positive in local terms (up +3.1%). US ADP National Employment figures showed fewer job losses, causing an initial spike in equities, which continued later in the week as it was […]

Why it pays to be a long term investor

Please read the full article here: In the current investment climate where central bank activity and algorithmic trading strategies are two primary driving forces of asset prices, enabling rapid losses and even faster gains as momentum funds then push winners higher and losers lower, we are reminded how important it is to follow a long […]

WEEKLY MARKET UPDATE: MARKETS SLIDE ON US-CHINA CONSULATE CLOSINGS

MARKET UPDATED Despite recent strength, equities closed lower last week as tensions between the US and China were ratcheted up, with the forced closure of the Chinese consulate in Houston and the arrest by the US of a Singapore national who has admitted spying for China. In response China has ordered the US consulate in […]

Weekly Market Update: Markets fall after record low US GDP data

Read our full Market Update Week 31 Market Update Major indices closed down for a second week running, with investors reacting to a flood of quarterly earnings reports and some prominent economic data. US corporate earnings were in the spotlight during the week, with tech giants Facebook, Amazon, Apple, and Alphabet reporting mostly healthy gains […]

Weekly Market Overview – US Dollar slide sees negative equity returns for UK investors

Global equities were mostly positive in local terms last week, however a fall in the US Dollar, combined with Sterling appreciating, meant that returns for UK investors were generally negative. Weak US Dollar performance was largely due to a statement at Davos by US Treasury Secretary Steve Mnuchin being interpreted as suggesting that the US […]

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