Market Monitor - 23 April 2021
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Market Monitor – 23 April 2021

Concerns about rising Covid-19 infection rates around the world have prompted sharp falls on global stock markets this week, erasing some of the gains made earlier this month.

While vaccination programmes are helping to keep the pandemic under control in the United States, the UK and other parts of Europe, the deteriorating situation in countries such as India and Brazil – as well as the emergence of potentially more harmful new variants of the coronavirus – has provided a reality check for investors. Indices on both sides of the Atlantic fell sharply on Tuesday as a result of these worries, but recovered to some extent in the sessions that followed.

The big monetary policy news this week was the European Central Bank’s announcement that it plans to ramp up its bond-purchase programme in the second quarter of 2021, pumping more money into the eurozone economy. On the fiscal side, a German constitutional court removed a major barrier to the creation of the European Union’s recovery fund, which could see major new stimulus measures introduced in the coming months.

The US

In the US, meanwhile, President Joe Biden unveiled his administration’s plans to decarbonise the American economy, pledging to halve US carbon dioxide emissions over the course of the next decade.

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.1% down for the week so far, with the S&P 500 faring slightly worse (-1.2%). General pandemic concerns aside, it was a bad week for streaming video service Netflix, which reported a sharp slowdown in new subscriptions after months of stellar growth.

Shares in Manchester United plc, which are listed in New York, surged on Monday following the announcement of a new breakaway European Super League of leading clubs: investors welcomed the fact that participants would no longer face the risk of missing out on the continent’s most lucrative competition, guaranteeing annual revenue streams from broadcasters and sponsors.

The reaction of fans, rival clubs and politicians in Britain, Spain and Italy, however, was considerably less friendly, and the share-price gains were quickly reversed when the project imploded spectacularly on Tuesday evening.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 1.2% down for the week despite the fact that Britain’s vaccination programme – combined with the first-quarter lockdown – appears to be keeping infection levels under control so far during reopening. The government’s efforts to support the housing market have borne fruit, with property prices continuing to rise, while UK inflation is also on an upward trajectory according to the latest data.

In Frankfurt, the DAX index ended Thursday’s session down 0.9% for the week, while France’s CAC 40 lost 0.3%. A positive reaction to the ECB’s announcement helped to reverse Tuesday’s losses, while consumer confidence in the eurozone has surged to its highest level since the pandemic started last spring.

In Switzerland, Credit Suisse’s woes continued: it reported a loss equivalent to almost £600 million following its involvement with Archegos, a collapsed US hedge fund.

April 16
April 22
Change (%)
FTSE 100
7019.5
6938.2
-1.2
FTSE All-share
4006.8
3965.0
-1.0
S&P 500
4185.5
4135.0
-1.2
Dow Jones
34200.7
33815.9
-1.1
DAX
15459.8
15320.5
-0.9
CAC 40
6287.1
6267.3
-0.3
ACWI
704.9
698.3
-0.9

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 22 April 2021.

23 April 2021
Mark King
Head of Investment Content
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Market Monitor – 23 April 2021

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