Market Monitor - 26 February 2021
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Market Monitor – 26 February 2021

Global stock markets have endured another volatile week: while there are encouraging signs regarding the end of the pandemic with the vaccine roll-out continuing across Europe and North America, investors are growing more and more concerned about rising inflation and the potential winding down of central bank stimulus measures as economies recover. Federal Reserve chair Jerome Powell has done his best to allay these fears in recent days: in his Senate appearance this week, he stressed that the Fed is firmly focused on the recovery and tackling unemployment in the United States rather than on rising prices. But markets are increasingly factoring in higher inflation, with bond yields – and therefore company borrowing costs – rising sharply this week as a result. The main losers this week have been technology stocks, which many analysts feel have been due a reality check given their eyecatching performance since the start of the pandemic a year ago. With many countries set to relax lockdown restrictions and the success of coronavirus vaccines suggesting many parts of the global economy could soon return to normal, there has been a shift by investors into hitherto hard-hit sectors such as travel and hospitality over the last few days. In the tech sector, on the other hand, the threats of more expensive borrowing and rising interest rates mean that some valuations are beginning to look overly optimistic, to say the least.

US markets

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.2% down for the week so far: after hitting an all-time closing high on Wednesday, the Dow was brought sharply back down to earth by a major sell-off during the following session. The S&P 500 was down 2% over the same period while the even more tech-heavy Nasdaq index had lost more than 5% for the week by Thursday’s close, with the likes of Tesla, Apple and Google among the major fallers. Nonetheless, a fall in the US unemployment rate provided some cheer this week, while the national vaccine programme has started to bounce back from recent weather-related disruption.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 0.1% ahead for the week, with gains among the likes of miners and value stocks such as airlines and hospitality firms trimmed by the strong pound. Those companies which have been affected the most by the pandemic had some grounds for optimism after Boris Johnson set out a timeline for the lifting of the ongoing lockdown measures across the economy – with the possibility that Britain could return to something resembling pre-crisis life by midsummer. In Frankfurt, the DAX index ended Thursday’s session down 0.8% for the week, despite a reported rise in business confidence and confirmation that the German economy had avoided a double-dip recession last quarter. France’s CAC 40 meanwhile gained 0.2%. Across the European Union, delays in rolling out vaccines is causing ever greater concern – and with infection rates on the rise again in France, among other member states, the road back to economic normality in the eurozone looks set to be somewhat rockier than in the UK.
19/02/2021
25/02/2021
Change (%)
FTSE 100
6642.0
6652.0
0.1
FTSE All-share
3770.0
3788.7
0.5
S&P 500
3906.7
3829.3
-2.0
Dow Jones
31494.3
31402.0
-0.3
DAX
13993.2
13879.3
-0.8
CAC-40
5773.6
5783.9
0.2
ACWI
679.7
667.1
-1.9

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 25/02/2021.

26 February 2021
Mark King
Mark King
Head of Investment Content
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Market Monitor – 26 February 2021

Important information

Past performance is not a guide to future performance. Your capital is at risk. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. This document is not investment, legal, tax, or accounting advice. Investors should consult with their own professional advisors for advice on any investment, legal, tax, or accounting issues relating to an investment with Columbia Threadneedle Investments. The analysis included in this document has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. This document includes forward looking statements, including projections of future economic and financial conditions. None of Columbia Threadneedle Investments, its directors, officers or employees make any representation, warranty, guaranty, or other assurance that any of these forward-looking statements will prove to be accurate. Information obtained from external sources is believed to be reliable, but its accuracy or completeness cannot be guaranteed. Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com

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Important information

Past performance is not a guide to future performance. Your capital is at risk. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. This document is not investment, legal, tax, or accounting advice. Investors should consult with their own professional advisors for advice on any investment, legal, tax, or accounting issues relating to an investment with Columbia Threadneedle Investments. The analysis included in this document has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. This document includes forward looking statements, including projections of future economic and financial conditions. None of Columbia Threadneedle Investments, its directors, officers or employees make any representation, warranty, guaranty, or other assurance that any of these forward-looking statements will prove to be accurate. Information obtained from external sources is believed to be reliable, but its accuracy or completeness cannot be guaranteed. Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com

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