Market round-up: 26-30 April

Thomas Watts


This week

Weighing 22lb (10kg) and measuring 8 inches wide (20cm), this week saw the Royal Mint produce the largest coin in its history, commemorating the Queen’s coronation route to Westminster back in 1953. However, the new coin, which has a value of £10,000, wasn’t the only piece of change that was being talked about amongst economists this week as it seemed the easing of lockdown restrictions was finally having the desired effect for long suffering retailers. 

Tuesday saw the CBI (Confederation of British Industry) release its realised sales figures, showing a vastly improved picture. The survey, which aggregated the views of 124 domestic businesses, including 60 retailers, showed sales came in well above seasonal norms for this time of year, beating many analysts’ predictions. 

Breaking the data down, it was DIY and furniture subsectors which saw sales significantly rise as consumers could re-enter their stores to start measuring up. Grocers and non-store retailers also reported that sales were strong for the time of the year, with both Tesco’s and Sainsbury’s making their way higher throughout the week. However, as any numismatist will tell you, there are two sides to every coin, with clothing and footwear store sales remaining depressed, well below their seasonal averages. 

Across the pond, Wednesday saw the US Federal Reserve carry on their policy of no change as their latest statement failed to deliver any surprises, making cents to market it’s seemed, which shortly after the announcement hit record highs yet again. As previously telegraphed, the Fed kept rates steady and maintained its $120 billion bond-buying programme. The central bank also upgraded their assessment of the economy, noting that amid progress on vaccinations and strong policy support, indicators of economic activity and employment have indeed strengthened. 

By the end of the week, the notion that the Fed's loose monetary stance, strong US corporate earnings and the notion that US President Joe Biden is going big on infrastructure, were all supportive for markets globally. Led by European oil majors, spurred on by bullish forecasts for a demand recovery this summer, any worries of rising COVID-19 cases in India, Japan and Brazil were more than offset.


Next week

With markets reaching all-time highs on an almost regular basis, and many parts of the world now opening up from the worst of the COVID-19 pandemic, it is no surprise that many economists feel a strong sense of bullishness surrounding the global economy. 

It is apt, therefore, that the coming week ushers in the beginning of May and, with it the astrological sign Taurus, the Latin for bull. Although the week is somewhat truncated due to Monday’s bank holiday, there is plenty to grasp by the horns as domestic mortgage approval data becomes public on Tuesday, detailing the number of new mortgages approved for home purchases during the previous month. The ripple effect from a house move can permeate many different sectors, including the bank and the estate agent which facilitated the move and the retailers who benefited from new items for the house being bought, and so the data is key to gauging the health of the wider economy. 

The middle of the week allows us to gain a clearer picture of how those on the continent are faring as the European Central Bank (ECB) gives its economic forecast for the bloc over the next two years. The forecast serves as the European Commission's basis for evaluating economic performance and trends of EU member states in regard to potential rate changes and should prove invaluable when judging the central bank’s next rate moves. 

The cows will be coming home on the first Friday of the month as the week is wrapped up with US Non-Farm Payroll data. The numbers will be accompanied by Average Hourly Earnings allowing us to gauge how inflation may manifest in the world’s largest economy.  With US bond yields having risen significantly over the past few months, it is pretty clear that the market is betting on inflation making a return in the near future.