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Archinomics Weekly - Monday 16th August 2021

one month ago

the
MARKETS

Equities

European shares made progress, with the Euro STOXX up 1.3%, as investors focused on economic recovery and shrugged off worries about surging Delta variant infections and slowing growth in Asia. US equities gained ground with the S&P 500 rising 0.7% to touch an all-time high on Friday, despite the shortfall in US consumer sentiment data. In Japan markets registered modest gains, with the Nikkei 225 up 0.6%, although the deteriorating coronavirus situation kept risk appetites in check.

Bonds

An improvement in the US labour market and speculation the Fed could soon start to unwind its bond buying programme lifted US and European bond yields. US yields then largely retraced their previous moves after the release of a disappointing University of Michigan consumer sentiment survey. In the euro area, core eurozone bond yields ended roughly level, rising into midweek before retreating on expectations that the ECB could remain dovish for longer.

Currencies

The US dollar took a hit, underperforming its major counterparts after the survey showing US consumer sentiment at its lowest level in a decade. The yen outshone the euro and the US dollar, on hopes that Japan might yet avoid a Q2 contraction.

Commodities

Gold ended the week with marginal gains, following a sharp 4.5% dip mid-week, given the weaker dollar and falling government bond yields. Crude oil prices remained under pressure, as the highly contagious Delta variant continued to rein in global growth expectations.

Responsible investing

The United Nations Principles for Responsible Investment (UN PRI), launched in 2006, remain the standard setter for sustainable investing. However, members will not be required to report on how they measure up to UN PRI standards until 2023, as the recent process overhaul has proved too ambitious.

MACROECONOMIC
UPDATE

Eurozone June Industrial Production fell 0.3% in June, as supply bottlenecks weighed on German factory output.


A US consumer survey (the University of Michigan index of consumer confidence) fell 13.5% in the month to mid-August, dipping below the lows reached in April 2020 during the early days of the pandemic.


China’s outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, rose 10.7% y/y in July, its slowest pace since February 2020.

on the
RADAR

Markets will look to the Federal Reserve’s FOMC minutes and the latest US retail sales data for direction, while a flurry of retail earnings could keep the focus on consumer strength.


Chinese data will give a snapshot of how the economy is faring, as the Delta variant spreads further.

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