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Archinomics Weekly - Monday 22nd March 2021

4 months ago

the
MARKETS

Equities

It was a mixed week for equities. The US stock market ended lower after a volatile week, as investors weighed up rising US Treasury yields and improved economic growth forecasts. The Euro Stoxx 50 index rose 0.1% over the week, but many European markets were weighed down by concerns over a resurgence in Covid-19 infections. Most Asian and emerging markets were lower over the week, although Japan rose slightly.

Bonds

US Treasury yields continued to increase (and prices fell), with the 10-year Treasury yield touching as high as 1.75% during the week. European government bond yields ended the week slightly lower, while UK gilt yields rose. Investment grade bond prices were flat in Europe but lower in the US, while high yield bonds were lower in both regions.

Currencies

The US dollar regained some ground against the euro and sterling. Sterling was lower against the dollar but rose slightly against the euro. The euro was lower against the dollar but flat against the pound. The Japanese yen rose against the dollar, euro and sterling.

Commodities

Oil suffered its biggest weekly drop since October 2020, and Brent Crude finished the week 6.8% lower at $64 per barrel. Oil was pushed lower by the fear of new lockdowns in Europe, and signs of weakened demand in the US and China. Gold rose 1% over the week to finish at $1,745 per ounce.

Responsible investing

The preliminary results of a European Central Bank (ECB) stress test have identified climate change as a major source of systemic risk. The research suggests that, if no further action is taken, extreme weather events could greatly affect company profits while increasing the likelihood of defaults (where a company cannot pay back its debts).

MACROECONOMIC
UPDATE

The Federal Reserve raised its estimate for US growth in 2021 to 6.5%, on the back of new fiscal stimulus and the quicker-than-expected Covid-19 vaccine rollout.


Covid-19 vaccines were in the headlines last week. The US hit its target of 100 million vaccinations, weeks ahead of schedule. But in Europe, several countries suspended use of the AstraZeneca vaccine over fears that it could cause blood clots, while a row over vaccine exports broke out between the EU and UK.

on the
RADAR

Investors will continue to watch US Treasury yields, with possible implications for fixed income and stock markets alike.


Several companies will release their latest earnings reports, including Chinese technology giant Tencent and video game retailer GameStop.


Purchasing Managers’ Index (PMI) survey data for the US, UK and Europe will give an insight into the health of each region’s economy.

Listen to our weekly podcast for more information and our experts’ insights.

Architas

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