Market Monitor - 9 April 2021
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Market Monitor – 9 April 2021

Stock markets around the world have continued their upward trajectory following the Easter weekend as optimism about the strength of the post-pandemic recovery grows.

Indices on both sides of the Atlantic have hit new highs on the back of a fresh round of positive economic data and ambitious government spending plans in the US.

New forecasts published by the International Monetary Fund (IMF) suggest that economic growth in the west is set to be faster than previously expected due to a number of factors, such as the rapid roll-out of coronavirus vaccines in countries such as the UK and US, as well as businesses’ ability to adapt quickly to the challenges posed by the pandemic. The IMF now thinks the global economy will expand by 6% this year and by 4.4% in 2022.

Investors have been cheered by comments from the US Federal Reserve indicating that the central bank will continue to support the financial system for the foreseeable future, and remains relatively unconcerned by the threat of rising inflation in the months ahead. Global markets are also hopeful that President Biden’s huge domestic infrastructure investment programme could help drive growth around the world, not just in the US.

US markets

On Wall Street it was another record-breaking week: the Dow Jones Industrial Average ended trading on Thursday 8 April 1.1% up for the week so far, with the S&P 500 rising 1.9% on the back of impressive gains among technology and travel stocks in particular.

Electric vehicle manufacturer Tesla was again among the top performers following strong sales data for the start of the year and news that the Biden administration is planning a new round of subsidies for zero-emissions vehicles. Meanwhile, signs that the US vaccination programme is starting to drive down Covid-19 infection rates provided a boost for travel and hospitality businesses.

Europe

In the UK, the FTSE 100 has had a spectacular week, ending Thursday 8 April 3% ahead and recording its highest close since the start of the pandemic. The gains were largely driven by optimism over economic performance in the months ahead, with the government’s plans for reopening different parts of the economy currently proceeding according to schedule.

Non-essential retailers and hospitality businesses can resume trading on 12 April as coronavirus infection and hospitalisation rates continue to fall. Concerns over possible side effects of the AstraZeneca vaccine have done little to dent investors’ confidence. The IMF revised its UK growth forecasts for 2021 higher by 0.8%, while the latest construction sector data points to a rapid expansion.

Construction activity is also up in the eurozone, although the European Union’s patchy vaccination programme means the IMF does not expect significantly more extra growth in Europe this year – its forecast for the region was upgraded by just 0.2%.

Nevertheless, investors are continuing to focus on the upsides, with indices in Germany and France reaching new highs. In Frankfurt, the DAX index ended Thursday 8 April up 0.6% for the week, while France’s CAC 40 gained 1%.

April 2
April 8
Change (%)
FTSE 100
6737.3
6942.2
3.0
FTSE All-share
3849.2
3961.0
2.9
S&P 500
4019.9
4097.2
1.9
Dow Jones
33153.2
33503.6
1.1
DAX
15107.2
15202.7
0.6
CAC 40
6103.0
6165.7
1.0
ACWI
681.0
692.6
1.7

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 8 April 2021.

9 April 2021
Investment Content Manager
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Market Monitor – 9 April 2021

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