Global stock markets have been in particularly bullish mood this week as investors shrug off concerns over rising inflation and focus on the prospect of a significant post-pandemic bounce in 2021.
A number of indices have surged to all-time highs over the past few days, bolstered by an accelerating global vaccine roll-out, the passing of the $1.9 trillion stimulus bill by the United States Congress, and pacifying comments from central bankers about the prospects of price rises – and a consequent tightening of monetary policy – over the coming months.
As bond yields have fallen back, investors are focusing on indicators that suggest the Covid-19 pandemic is being brought under control – and that the current mix of available vaccines will be sufficient for economic activity around the world to return to normal, even in the face of new coronavirus variants.
Vaccination programmes in the UK and US continue to gather pace, and there are signs that vaccine supplies in regions such as mainland Europe are starting to ramp up following early difficulties. Business and consumer confidence surveys on both sides of the Atlantic reflect growing optimism about economic performance over the rest of the year, while this week’s inflation figures – in the US in particular – have helped to calm fears of uncontrolled price rises.
US markets
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 3.5% up for the week so far, with the S&P 500 gaining 2.8% – with both indices hitting record highs as a result. The passing of the Democrats’ huge stimulus package has been the biggest story for investors in America, with Treasury secretary Janet Yellen promising a strong recovery for the US economy as a result.
The latest jobs figures in the US suggest this recovery could already be underway, with both new and ongoing unemployment claims declining sharply this week as many states start to relax their lockdown measures. Technology shares have moved firmly back into the spotlight, with the tech-heavy Nasdaq index reversing recent losses thanks to a week of significant gains for the likes of Microsoft, Apple and Facebook.
The UK and Europe
In the UK, the FTSE 100 ended Thursday 1.6% ahead for the week, with shares in London missing out on some of the exuberance seen in Europe and the US. The FTSE was not helped by further strength in sterling, nor by the falls in commodity prices that have affected the numerous mining businesses listed in the UK. But the likes of travel, leisure and hospitality shares have again performed well in anticipation of a full reopening of the British economy by the summer.
In Frankfurt, the DAX index surged to its own all-time high, ending Thursday’s session 4.6% ahead for the week. In France, the CAC 40’s performance was almost as impressive, gaining 4.2%. Weakness in the euro has helped, but investors were particularly pleased to hear that the European Central Bank had decided to bring forward its next round of asset purchases in order to shore up struggling eurozone economies.
Mar 5 | Mar 11 | Change (%) | |
|---|---|---|---|
FTSE 100 | 6630.5 | 6737.8 | 1.6 |
FTSE All-share | 3771.7 | 3841.2 | 1.8 |
S&P 500 | 3841.9 | 3948.6 | 2.8 |
Dow Jones | 31496.3 | 32606.7 | 3.5 |
DAX | 13920.7 | 14562.8 | 4.6 |
CAC 40 | 5782.7 | 6024.2 | 4.2 |
ACWI | 657.5 | 674.9 | 2.6 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 11 March 2021.
