Market Monitor - 30 July 2021
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Market Monitor – 30 July 2021

Stock markets have managed to rebound from losses early in the week as fears over a regulatory crackdown by Chinese authorities subsided. Meanwhile, official data has once again highlighted the uneven nature of the global economic recovery from Covid-19: this suggests that central banks will be unlikely to remove stimulus support or hike interest rates in the short term.

Share prices on both sides of the Atlantic made a lacklustre start to the week on Monday following heavy losses on markets in Asia. This was blamed on news from China that regulators were planning new restrictions on education and technology firms in relation to international and domestic stock listings, as well as their ability to generate profits in China itself.
Earlier in July, the Chinese ride-hailing service Didi lost 20% on the New York Stock Exchange following the announcement of a similar clampdown by authorities in its home country. However, markets across Asia managed to bounce back on Thursday after the Chinese government appeared to row back on some of its more draconian restrictions.
The latest GDP figures in the United States fell well short of expectations on Thursday, with growth between April and June reported an annualised rate of 6.5% – well below analysts’ expectations of 8.5%. A day earlier, the policymakers at the Federal Reserve had confirmed that no decisions on when to unwind current market support measures will be made until the Jackson Hole symposium at the end of August.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.1% up for the week so far, with the S&P 500 0.2% better off by the same stage. US shares managed to recoup early losses on Wednesday and Thursday thanks to some strong earnings reports from major technology businesses such as Apple, Microsoft and Alphabet, Google’s parent company. However, investors remain concerned about the potential for international supply chain issues, in particular shortages of semiconductors, to affect the tech sector over the next few months.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 0.7% ahead for the week, with share prices buoyed by signs that the soaring coronavirus infection levels across Britain are being brought under control.
The number of new Covid-19 cases has continued to trend downwards this week, contrary to predictions made by health officials earlier in the month. This news, coupled with government plans to lift travel restrictions for visitors who have had two shots of coronavirus vaccines, has provided a boost for airlines and holiday firms. Meanwhile, both Lloyds and Barclays posted strong results for the first six months of 2021, with the latest figures from Shell and BAE also impressing investors.
In Frankfurt, the DAX index ended Thursday’s session down 0.2% for the week, with inflation in Germany reportedly rising to 3.1%, well ahead of the 2% eurozone target. With the unemployment falling, there are signs that the German economy is starting to click into gear.
In France, meanwhile, the CAC 40 gained 1% this week thanks in no small part to a sharp improvement in profit forecasts at manufacturer Airbus.
July 23
July 29
Change (%)
FTSE 100
7027.6
7078.4
0.7
FTSE All-share
4025.1
4054.1
0.7
S&P 500
4411.8
4419.2
0.2
Dow Jones
35061.6
35084.5
0.1
DAX
15669.3
15640.5
-0.2
CAC 40
6568.8
6633.8
1.0
ACWI
727.1
729.7
0.4

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 29/7/2021.

30 July 2021
Mark King
Mark King
Head of Investment Content
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Market Monitor – 30 July 2021

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