Market Monitor - 7 May 2021
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Market Monitor – 7 May 2021

Global stock markets have enjoyed another buoyant week as expectations of a strong recovery from the pandemic in Europe and North America grow.

Economic indicators in the United States, United Kingdom and eurozone continue to suggest that growth over the coming months is set to surge: indeed, many analysts predict that the after-effects of the coronavirus-driven recession will be far more short-lived than was the case in the wake of previous downturns.

The success of Covid-19 vaccination programmes on both sides of the Atlantic are the main factor behind this week’s optimism. In the US and UK in particular, substantial parts of the population now have full protection against the coronavirus – a fact that is reflected in declining hospitalisation and death rates, both of which continue to fall despite the recent easing of lockdown restrictions.

Meanwhile, however, the pandemic continues to rage in the likes of India, Turkey and South America. Pressure on western governments to help increase vaccine supply to the developing world is growing, and a number of nations – including the US – now support a suspension of patents in order to speed up vaccine production outside of Europe and America.

This threat to intellectual property has hit the share price of a number of major pharma companies, including leading vaccine manufacturers Moderna and BioNTech. However, many experts point out that the current bottleneck in vaccine production relates to a lack of manufacturing facilities and expertise rather than any patent-related restrictions.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2% up for the week so far, with the S&P 500 0.5% ahead: once again, both indices have hit record highs. Investors in the US were able to shrug off comments from Treasury Secretary Janet Yellen that strong growth and rising inflation could lead to hikes in interest rates later in the year – focusing instead on falling unemployment numbers and other positive economic data.

However, the recovery in the US and elsewhere could be threatened by global materials and components shortages and general supply-chain problems: the Institute of Supply Management in America noted that factory activity last month had increased at a slower pace than earlier in the year.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 1.5% ahead for the week, reaching its highest point since the start of the pandemic in early 2020. Travel firms have performed well on the hopes that this summer’s holiday season could be a return to near-normal. The British government will shortly set out its policy on testing and isolation requirements for international arrivals, while the European Union has said its member states will be open to countries with low infection rates.

The Bank of England on Thursday said it would continue its current stimulus programme despite an improved economic outlook, providing another boost for share prices.

In Frankfurt, the DAX index ended Thursday’s session up 0.4% for the week, while France’s CAC 40 gained 1.4%. Retail sales across Europe are booming as restrictions are lifted, new figures show, while there are signs are that the eurozone has already emerged from recession.

April 30
May 6
Change (%)
FTSE 100
6969.8
7076.2
1.5
FTSE All-share
3983.9
4032.1
1.2
S&P 500
4181.2
4201.6
0.5
Dow Jones
33874.9
34548.5
2.0
DAX
15135.9
15196.7
0.4
CAC 40
6269.5
6357.1
1.4
ACWI
701.8
704.1
0.3

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 6/5/2021.

7 May 2021
Mark King
Mark King
Head of Investment Content
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Market Monitor – 7 May 2021

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