With the beginning of the week unsurprisingly seeing snow flurries on the Easter Monday bank holiday, just after the previous week’s heatwave, investors were still left with that warm feeling as global markets reached record highs yet again.
Obviously reeling from a four-day weekend, a host of strong economic data points did little to initially muster much enthusiasm as treasury yields edged up with global markets remaining largely flat. Focusing on the approaching earnings season and the Federal Reserve’s economic outlook just days away, Friday’s blockbuster US jobs report and subsequent PMI data showing the services sector’s fastest expansion on record seemed to have got somewhat lost in the ether.
However, towards the end of the week, the slew of strong economic data, coupled with well taken remarks from the US Federal Reserve, helped both North American and European bourses to reach all-time highs. With growing enthusiasm that the response to the COVID-19 pandemic is becoming increasingly stronger, it was those sectors that would benefit from an end to lockdown measurements and increased economic activity which outshone the broader index, with miners, automakers and retailers all leading the way.
Looking past potential issues with the AstraZeneca vaccine after several European countries had announced restrictions on its use, investors instead, chose to focus on the minutes made public from the Fed’s previous meeting, showing they were still committed to bolstering the economy until its recovery is more established.
Whilst investor’s basked in the glory of another short week, there is no such luck for those heads of Financial institutions as the end of the week ushers in the latest IMF meeting, set to run across the entirety of the weekend. Such meetings are usually held twice a year and are attended by the representatives of the IMF and the World Bank. Meetings are open to the press and officials usually talk with reporters throughout the day with some unscripted moments or comments potentially causing heightened volatility.
With the impending week coming off the back of a series of IMF meetings held over the weekend, the tone for markets could be set early, as a host of top-ranking financiers give their views on the global economy.
One factor that is agreed on by most economists, however, is the huge levels of pent up demand in the global system. With time being the only currency consumers can spend right now, savings figures being accumulated are at a record high. With analysts seeing the number of shoppers visiting retail parks and essential shops in March starting to gather pace, a 48% rise in sales is now predicted when lockdown restrictions are lifted on 12 April. Interestingly, during the recent four-day bank holiday, footfall in central London and other large British cities was three times greater when compared to the same period in March 2020, just after the first Coronavirus restrictions were put in place.
With such optimism surrounding the high street, Monday’s retail sales data, released by the British Retail Consortium, should take on added significance as it reflects a change in the value of sales on a yearly basis, which will be the last data point before shops reopen their doors next week.
With such pent-up demand in the system, a lot of economists have predicted a sharp rise in inflation once consumers can go out and spend their hard-earned cash. Across the pond, the Bureau of Labor Statistics releases its CPI data, detailing the changes in prices and services on a monthly basis. With the data having come in at a level consistent with expectations over the past three months, many will be hoping the trend continues as we reach a possible inflection point in the year.
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.