Global stock markets have made steady progress this week: while there is still no sign of an imminent tightening of monetary policy by any of the major central banks, concerns over the spread of the Delta coronavirus variant continue to limit gains.
Fears are emerging in Europe and Asia that new lockdown policies may be required in the autumn – if not sooner – to address sharply rising infection rates, despite the vaccine roll-out. These worries have helped drive down oil prices over the past few days, and the global energy sector has also been hit by renewed warnings from the United Nations about the potential impact of unchecked climate change.
The US
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 12 August 0.8% up for the week so far, with the S&P 500 gaining 0.5%. Stocks in the US rose to record highs on Wednesday on the news that the latest set of infrastructure spending plans put forward by President Biden had been given the green light by lawmakers in the Senate.
Investors were also buoyed by the news that core inflation appears to be easing in the US – suggesting the Federal Reserve will be less likely to unwind stimulus measures in the near future. However, the picture was muddied by data published on Thursday 12 showing that the prices charged by producers to end users were rising by the fastest annual rate in more than a decade.
Europe
In the UK, the FTSE 100 ended Thursday 12 August 1% ahead for the week with coronavirus infections remaining steady following last month’s surge. The latest data from the Office for National Statistics showed the British economy grew by almost 5% in the second quarter of 2021, beating analysts’ expectations.
In London, shares in energy companies struggled as the oil price fell, while property investors and construction firms also slipped back – the end of the stamp duty holiday is expected to limit gains in the housing market in the coming months.
In Frankfurt, the DAX index ended Thursday’s session 1.1% ahead for the week, while France’s CAC 40 also closed in the black, gaining 1%. German exports were reported on Monday 9 August to have continued their recent climb, despite the ongoing supply-chain issues hampering the country’s manufacturing sector.
Across the eurozone, however, investor optimism has gone into reverse over fears that new restrictions will have to be implemented in the next few months in order to curb the spread of the Delta variant.
Asia
In Asia, the Hang Seng index in Hong Kong finished 1.3% up for the week at Thursday’s close, while Japan’s Nikkei 225 index of shares gained 0.7%. Growth in China is at risk of being curtailed by the Delta variant, with travel restrictions now in place to limit the spread of infections. However, this makes it increasingly unlikely that central bankers in Beijing will remove stimulus measures in the short term.
Japan’s SoftBank, meanwhile, has announced plans to scale back its investments in technology startups in China following the recent crackdown on the sector by the Chinese government.
Aug 6 | Aug 12 | Change (%) | |
|---|---|---|---|
FTSE 100 | 7123.0 | 7193.2 | 1.0 |
FTSE All-share | 4088.9 | 4131.8 | 1.0 |
S&P 500 | 4436.5 | 4460.8 | 0.5 |
Dow Jones | 35208.5 | 35499.9 | 0.8 |
DAX | 15761.5 | 15937.5 | 1.1 |
CAC 40 | 6817.0 | 6882.5 | 1.0 |
ACWI | 731.2 | 734.8 | 0.5 |
Hong Kong Hang Seng | 26179.4 | 26517.8 | 1.3 |
Nikkei 225 | 27820.0 | 28015.0 | 0.7 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 12/8/2021.
