Market roundup 29-1 April

Thomas Watts


This week

The week that was saw investors wake up to the great news that not only had the UK now administered the first dose of the COVID-19 vaccine to over half its population but also that outdoor sports facilities, including golf courses and tennis courts, had now reopened. 

Also teeing off at the beginning of the week was the US dollar after news of a hedge fund’s default on its margin payments left global equities firmly in the rough. Banking behemoths Credit Suisse and Nomura both admitted they could be seeing write-downs into the billions from hedge fund Archegos, which had experienced a fire sale on its assets the week before. Nomura shares in Japan plummeted 16.3%, a record one-day drop for the firm, while Credit Suisse shares fell 13.8%, as investors scrambled away from confessed “highly significant and material” losses to first quarter results. 

A rise in oil prices halted any potential slide in the wider market as news that the Ever Given container ship, which had blocked the Suez Canal for nearly a week, had escaped the water hazard, clearing the way for traffic to start moving through the area once more. Brent crude futures rose to $64.98 a barrel, dragging up UK heavyweights Shell and BP in the process.

Gold slipped more than 1% to a more than two-week low as a firm dollar and rising US Treasury yields dented the safe-haven metal’s appeal. The yellow metal was also under pressure as optimism about a swift US recovery gathered pace. 

In a truncated week due to Good Friday, there was enough economic data releases to keep economists on their toes. The middle of the week saw US jobs data come in way above par, as employers hired the most workers in six months during March and rates of inoculations against COVID continued to climb. With pent up demand in the US system already showing, it was the leisure and hospitality sectors that performed strongest, alongside technology shares, enjoying something of a rebound from another sell off during the earlier part of the week.  

Private payrolls surged by 517,000 jobs this month after rising 176,000 in February. Slightly less than the 550,000 anticipated by economists, but strong enough to show that the world’s largest economy is beginning to reopen, no ifs, no putts.

Next week

The coming week, shortened by a potential day of Easter egg hunts in the snow, will see plenty for economists to hop to, as a range of economic data comes to the fore.

With well publicised difficulties in administering the COVID-19 vaccine effectively on the continent, Tuesday should allow us to gauge just how much of an impact on the overall economy these issues have had, with both European investor sentiment and unemployment rates. The two sets of data are inextricably linked as low consumer confidence often leads to lower purchasing rates, and therefore depressed margins for many retailers. Of course, the outbreak of COVID-19 has had a profound effect on labour markets all over the world, with many being forced from their jobs as lockdown measures came into place. The data should give us some idea of how much the European economy is starting to open up and just how investors rate the six-month economic outlook for the Eurozone. 

Towards the end of the week, investor attention should switch across the pond as the US Federal Reserve release the minutes that accompany their last formal meeting. With the central bank looking to let inflation ‘run hot’ for a prolonged period, the minutes from their latest discussion on future rate policy should make for fascinating reading. The minutes themselves should act as a detailed record of the bank’s latest thoughts towards the US economy, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding in April 2021.