Market Monitor - 12 February 2021

Market Monitor – 12 February 2021

Global stock markets have extended their February gains this week, although most indices have struggled to maintain the stellar performance seen at the start of the month. For the time being at least, there is a clear tension between optimism that the roll-out of Covid-19 vaccines around the world will soon enable major economies in Europe and North America to return to normal, and concern that the emergence of new, vaccine-resistant variants of the coronavirus could prolong the pandemic. One of the main worries is that the cheaper, more versatile vaccine developed by AstraZeneca with Oxford University has been found in some studies to be less effective against the highly infectious variant that is currently dominant in South Africa. But with a number of countries imposing strict new quarantine requirements on international arrivals, there are hopes that the spread of this variant can be contained. Investors were buoyed at the start of the week by economic data from China showing a strong recovery in domestic car sales, an important indicator of consumer confidence. Markets also expect the extra stimulus spending in the United States to drive share prices higher around the world. Meanwhile, investor interest in cryptocurrencies surged again this week after Tesla boss Elon Musk revealed his company had made a significant Bitcoin purchase – and would in future sell cars priced in the currency.

US markets

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.9% up for the week so far, with the S&P 500 similarly 0.8% ahead. Share prices in the US are being kept afloat by government stimulus hopes, while Federal Reserve chairman Jerome Powell also helped to calm nerves by stating the Fed would not rush to raise interest rates while the American economy was recovering.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 0.6% ahead for the week as Britain’s vaccination roll-out continued apace. Almost a fifth of the population – including the vast majority of the over-75s – have now received either an AstraZeneca or Pfizer shot. The impact of the inoculations on infection rates and hospital admissions among older people should, in theory, start feeding through into official statistics over the next few weeks. Britain’s international trade, meanwhile, continues to suffer as a result of problems caused by the new border arrangements with the European Union. Reports suggest that UK exports to the bloc were down by more than 60% in January, while forecasts published by Brussels suggested that Britain would take a far bigger medium-term hit to GDP than the EU as a result of Brexit. In Frankfurt, the DAX index ended Thursday’s session down 0.1% for the week following last week’s surge, while France’s CAC 40 gained 0.2%. The vaccine roll-out across the eurozone remains stuck in first gear, but the European Commission has nonetheless predicted that Europe’s major economies will return to pre-pandemic levels sooner than previously expected.
Change (%)
FTSE 100
FTSE All-share
S&P 500
Dow Jones

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 04/02/2021.

12 February 2021
Mark King
Head of Investment Content
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Market Monitor – 12 February 2021

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