Market Monitor - 25 June 2021

Market Monitor – 25 June 2021

Stock markets around the world have made impressive gains this week despite fresh signs of an uneven global recovery from the pandemic. Indeed, investors appear to have welcomed the latest batch of mixed economic data from China, the United States and Europe – most likely because it means that central banks will be compelled to continue supporting markets with stimulus measures for longer than previously expected.
The stimulus programmes run by the likes of the Bank of England, the Federal Reserve in America and the European Central Bank have underpinned stock market performance since the start of the pandemic in spring 2020. Their withdrawal – along with the threat of higher interest rates to curb inflation – is currently seen as one of the main risk factors for share prices.
But both Fed chair Jerome Powell and the Bank of England’s Monetary Policy Committee (MPC) have made statements this week that have helped soothe investors’ nerves with regard to tightening monetary policy. Powell reiterated the point that the Fed would not turn off the stimulus taps purely based on the expectation of higher inflation, while the MPC in its monthly meeting voted almost unanimously to maintain its asset-purchase programme at current levels.
Weaker manufacturing data from the UK and US suggests that the road to economic recovery is likely to be uneven, while unemployment claims in America once again exceeded predictions. Meanwhile, Bitcoin suffered more sharp falls earlier in the week after the Chinese government reiterated its plans for tighter regulation of cryptocurrency trading.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2.7% up for the week so far, with the S&P 500 gaining 2.4%, more than making up for the losses suffered at the end of last week. There are increasing signs in the US that the recent surge in inflation is likely to be transitory – which is excellent news for investors who had been worried about higher interest rates.

The UK & Europe

In the UK, the FTSE 100 ended Thursday 1.3% ahead for the week, with employment figures continuing to impress. The government gave the travel sector a boost on Thursday with the announcement of some limited lifting on restriction on international arrivals, and also with plans to relax quarantine measures for fully vaccinated holidaymakers later in the summer.
However, the spread of the Delta coronavirus variant in the UK is causing increasing concern – and has raised questions about whether the country will be able to meet its July 19 reopening deadline.
A number of British supermarkets saw their share prices rise following news of a possible private equity takeover bid for Morrisons, while London-listed energy firms have continued to benefit from the resurgent oil price.
In Frankfurt, the DAX index ended Thursday’s session up 0.9% or the week, a gain which was matched exactly by France’s CAC 40. The more muted performance across Europe this week reflects growing concerns over the spread of the Delta variant, with German chancellor Angela Merkel warning that the continent is on “thin ice” in its battle against the pandemic.
Nonetheless, businesses growth in the eurozone is running at its fastest pace since the financial crisis while private-sector confidence is also at a recent high.
June 18
June 24
Change (%)
FTSE 100
FTSE All-share
S&P 500
Dow Jones
CAC 40

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 24/6/2021.

25 June 2021
Mark King
Head of Investment Content
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Market Monitor – 25 June 2021

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