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Archinomics Weekly - Monday 26th April 2021

21 days ago

the
MARKETS

Equities

Equity markets around the globe struggled to make headway, in the face of a resurgence of Covid-19 outbreaks. US markets were upset by President Biden’s plans to double the capital gains tax rate. European markets slipped as the pandemic situation worsened in some areas, overshadowing strong corporate earnings. Japan was held back by a return to a state of emergency, in response to surging infection rates. China’s CSI 300 index was boosted by new regulation to curb the expansion of fintech firms.

Bonds

Government bond markets had a better week, although the German Bund failed to respond to the ECB’s remarks about its bond buying programme. Credit markets were slightly firmer, although the high yield end was hit by fears that post-pandemic reopening might be delayed. Returns for hard currency emerging market debt were flat last week, a touch behind global fixed income.

Currencies

The dollar was weaker across the board, in anticipation of no short-term change to monetary policy. The euro was stronger against all majors, as eurozone manufacturing PMIs hit highs not seen since records began in 1997 and the ECB promised continuing support.

Commodities

A year after prices plunged to negative territory, oil was hit by proposals to make OPEC subject to US anti-trust law, putting future efforts to control the oil price in doubt.

Responsible investing

President Biden committed to cutting greenhouse gas emissions by 50% (from 2005 levels) by 2030. Major economies such as the eurozone, China and Japan also increased their commitments to tackling climate change.

MACROECONOMIC
UPDATE

US flash PMIs hit record highs for both the services and manufacturing series, while the Eurozone manufacturing PMI also touched a record and Japan’s flash composite PMI rose above 50 for the first time since the pandemic began.


US quarterly earnings saw strong numbers from ‘Covid winners’ such as tech stocks, although Netflix new subscribers fell way short of expectations. ‘Covid losers’ such as airlines and energy companies reported another challenging quarter.


The European Central Bank pledged to keep borrowing costs low and to continue with the accelerated pace of its bond buying programme.

on the
RADAR

The US Federal Reserve meeting will likely bring a continuation of its patient stance, although markets will be alert to commentary on inflationary pressures.


Apple, Amazon, Facebook and Microsoft report Q1 earnings and comments about the transition to the post-pandemic world will be closely analysed.

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

Architas

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