Market Monitor - 16 April 2021
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Market Monitor – 16 April 2021

The prospects of a global economic boom in 2021 have driven stock markets to new highs this week as investors focus on a potential post-Covid recovery that is even stronger than previously expected.

The latest delays in the international vaccination programme have been largely shrugged off, while concerns about rising inflation and interest rates – which stalked markets earlier in the year – appear to have been put on the back burner for now.

With reporting season starting in the United States and Europe and a slew of new economic data being published this week, investors have had plenty of good news to chew over. America’s banks in particular have posted impressive first-quarter earnings figures in the last few days – strong performance in the financial sector is typically a sign that the wider economy is on an upward path.

Meanwhile, the success of the vaccine roll-out in the US coupled with impressive new retail sales and employment figures have helped to reinforce the view that America may have already experienced the worst of the pandemic.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.7% up for the week so far, with the S&P 500 gaining 1%: once more, both indices have recorded all-time highs this week. Despite news of a rise in US inflation last month, yields on government bonds – a proxy for future interest rate expectations – have fallen, providing a boost for technology. It appears that the Federal Reserve’s message that it will not take action to quash inflation until the recovery is well underway has been clearly heard.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 1% ahead for the week: at just under 7,000 this is again its highest figure since the start of the pandemic last spring. Investors in Britain have been buoyed by the fact that the UK’s reopening plans remain on track, while infection and hospitalisation rates continue to fall.

Controversies over the side effects possibly caused by certain vaccines have so far done little to hamper the UK’s vaccination efforts, and it is hoped that the speed of the programme and the high take-up rate will help Britain avoid the type of third wave that is currently widespread on the other side of the channel.

Shares in Tesco fell this week after the retailer said it had incurred significant costs in adapting its operations during the pandemic. But pharma company GlaxoSmithKline jumped sharply on speculation it could be subject to a takeover bid.

In Frankfurt, the DAX index ended Thursday’s session up just 0.1% for the week, with shares in Germany held back by the imposition of another national lockdown and worsening economic sentiment. The path back to reopening and growth across Europe is still being constrained by poor vaccine availability and concerns about side-effects. In France, meanwhile, the CAC 40 gained 1%.

April 9
April 15
Change (%)
FTSE 100
6915.8
6983.5
1.0
FTSE All-share
3949.5
3988.7
1.0
S&P 500
4128.8
4170.4
1.0
Dow Jones
33800.6
34036.0
0.7
DAX
15234.2
15255.3
0.1
CAC 40
6169.4
6234.1
1.0
ACWI
694.7
702.0
1.1

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 15 April 2021.

16 April 2021
Mark King
Head of Investment Content
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Market Monitor – 16 April 2021

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