Market Monitor - 2 July 2021

Market Monitor – 2 July 2021

Global stock markets have managed to claw back this week’s early losses – but investors remain concerned about the spread of the Delta coronavirus variant, as well as the supply chain challenges facing manufacturers around the world. Covid-19 infection rates are starting to climb again even in countries where the vaccine roll-out is well underway, raising fears that some forms of restrictions – for example on international travel – may need to remain in place for the foreseeable future.
And while a wide range of economic indicators continue to show clear signs of recovery, the supply issues that have been caused by the pandemic are making life particularly difficult for manufacturers in Europe and North America, hampering production and pushing up costs.
However, central banks have again made the point that while these problems and the post-pandemic recovery in general may cause a temporary spike in inflation, there are no signs at the moment that prices will continue to rise persistently in a way that would require an imminent tightening of monetary policy.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.6% up for the week so far, with the S&P 500 0.9% ahead. Again in the United States, there has been a mixed picture on jobs, with new unemployment claims down for the first time in several weeks, but ongoing claims on the rise. As coronavirus fears grow, technology stocks have performed well again, leading the Nasdaq index to a new high on Monday. Shares in aircraft manufacturer Boeing fell earlier in the week on the news that its new 777X jet may not be certified before the end of 2023.

The UK & Europe

In Britain, the FTSE 100 ended Thursday 0.2% down for the week, with the rapidly spreading Delta variant causing major concerns for investors. While the government is still committed to its latest economy-reopening date of July 19, it seems certain that international travel restrictions – both for Brits heading overseas, and for arrivals into the UK – will remain in force over the rest of the summer. Airline shares and other travel stocks have had a particularly difficult week as a result.
Bank of England governor Andrew Bailey said on Thursday that central bankers should not overreact to rising prices, but noted that inflation in the UK could hit 4% in the next few months. In British factories, input costs rose at a record rate in June while manufacturers say they are struggling to meet demand.
In Frankfurt, the DAX index ended Thursday’s session level for the week, while France’s CAC 40 lost 1%. The eurozone inflation rate fell for the first time in several months in June, bringing price rises back in line with the target set by the European Central Bank.
Meanwhile, there are signs the Delta variant is beginning to gain a foothold across mainland Europe, despite the ongoing vaccination programme.
June 25
July 1
Change (%)
FTSE 100
7136.1
7125.2
-0.2
FTSE All-share
4067.8
4062.5
-0.1
S&P 500
4280.7
4319.9
0.9
Dow Jones
34433.8
34633.5
0.6
DAX
15608.0
15603.8
0.0
CAC 40
6622.9
6553.8
-1.0
ACWI
721.9
721.8
0.0

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 1/7/2021.

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2 July 2021
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