Market Round-up: 15-19 March

Thomas Watts

In a week which saw Tiger Roll claim a dramatic fifth win at the Cheltenham Festival, it was on the continent where the real non-starters could be found, as Europe’s largest economies faced the daunting prospect of increasing their lockdown periods.


This week

It had all started so well for the bloc’s leading bourses, as Tuesday saw them creep towards record highs. Lending some real horsepower to proceedings was Volkswagen, after the world’s second-largest carmaker said it was confident that ongoing cost cuts will help it to improve profit margins in the coming years. Rising nearly 4% it helped lift Germany’s DAX index up 0.5%

After a week-long steward’s enquiry into the safety of the Oxford/AstraZeneca COVID jab on the continent, Germany, France, Italy and Spain said they would resume using the vaccine on Thursday after the EU drugs regulator said there was a “clear scientific conclusion” that the injection was “safe and effective”. 

With a vaccine rollout plan on the continent which has had mixed success at best, the dalliance seems to have cost Europe dearly, as Friday saw most of the week’s gains erased after France was forced to impose fresh regional lockdowns to curb the spread of the Coronavirus amid signs of slowing vaccination in some countries. France’s CAC 40 benchmark suffered a 0.7% decline after the nation imposed a new four-week lockdown from Friday in 16 regions badly hit by the health crisis.

Energy, banks, and miners led the declines as fresh social distancing restrictions dampened hopes of a swift economic rebound. Crude prices were hit especially hard with oil plunging almost 7% overnight on fears the new lockdowns will hurt fuel demand.

Across the pond, the going was far from good for US tech stocks either, as the yield on the U.S. 10-year Treasury note rose above 1.75% on Thursday for the first time in 14 months after the Federal Reserve pledged to look past inflation and keep interest rates near 0% until at least 2024. The jump in yields only served to accelerate investor moves out of growth stocks, with the tech-heavy NASDAQ falling more than 2% towards the end of the week.

Next week

With Europe’s vaccine roll out coming under increased scrutiny, it is only right that the week starts with news from the continent, this time, in the form of Germany’s Bundesbank monthly report. 

Containing relevant articles, speeches and statistics, it provides a detailed analysis of current and future economic conditions from the central bank's viewpoint. Although having a fairly muted impact on markets due to the power of the overarching European Central Bank, it can make for interesting reading, especially if their views clash with the ECB, considering the power Germany wields within the EU. 

In contrast, the UK seems to be marshalling in a very coherent vaccine roll out, with restrictions on most retail closures set to be lifted by 12 April. By this token, the Office for National Statistics’ Average Hourly Earnings data may come a month too early, but should provide a fascinating insight into how wages have been holding up during the pandemic and the effect the government’s furlough scheme has had on them. The data itself will represent the three-month moving average compared to the same period a year earlier, stripping out bonuses and other outliers that may skew the numbers. 

The data will also be accompanied by various statements from the Bank of England’s Monetary Policy Committee more senior members. Such statements add colour to the statistics and will prove invaluable when gauging how well the domestic economy is performing. 

It’s back to Europe during the middle of the week, where a slew of European PMI data is released, showing us just how much those on the continent have been making over the past month. Manufacturing PMI data will be released for the majority of Europe’s major economies, including Germany and France, giving us a more comprehensive view of just how much of an effect the latest round of COVID-19 restrictions have had on Europe’s manufacturing sector.

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 March 2021.