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Equities Tick Higher

26 March 2021


After the past year, it hardly seems necessary to state that disruption is rarely far away. Whether it be company, economic, weather, or pandemic related, unforeseen events or events considered unlikely can impact on market sentiment, albeit much of the impact is often short-term in nature. The blocking of the Suez Canal by a massive cargo ship was not high on the list of likely happenings, but then again neither was a Luxembourg victory over Ireland. At least 10% of world’s seaborne trade is estimated to rely on the 120-mile canal. The alternative shipping route is via the south of Africa, which reportedly adds about two weeks to delivery times – the longer the ship remains stuck in place the greater the threat to supply chains already clogged up by the likes of trade disputes and semiconductor shortages.

And yet by the end of the week, most major markets had achieved positive returns. The US Nasdaq index was an outlier once again, declining 0.6% in the week even as the S&P 500 gained 1.6%. After a strong run over much of the past year, the tech-heavy Nasdaq has lagged of late as investors seek out stocks perceived as more likely to benefit from a cyclical upturn.

Mixed COVID News
Global equities had a good start to the week after Oxford-AstraZeneca reported its vaccine had a 79% efficacy rate in a US trial, and that it is 100% effective in protecting against death from the coronavirus. Those figures were subsequently questioned on the basis of outdated information before the company revised the efficacy rate modestly to 76%, taking some of the shine off the earlier announcement. The US FDA has yet to approve the vaccine.

In other virus-related news, President Biden upped his original target of 100 million jabs in his first 100 days in office to 200 million jabs in 100 days, having already passed the initial target. Even as vaccinations increase, there was an uptick in infection rates in a number of US states. Europe remains far behind with new lockdowns being touted in a number of countries as case numbers rise against the backdrop of a slow vaccine rollout – France and Belgium extended restrictions, although German plans to restrict people’s movement over Easter were reversed after a strong public backlash. The European Commission stopped short of formally banning AstraZeneca vaccine exports but EC President Ursula von der Leyen said the company must catch up on deliveries to the EU before exporting doses elsewhere.

Ireland in Focus
The Economic and Social Research Institute (ESRI) reduced its growth forecast for the Irish economy for 2021 from 4.9% to 4.4%, citing the extended Level 5 restrictions. It also noted high unemployment that is unlikely to return to pre-pandemic levels until late 2023 “at the earliest” – it anticipates that the jobless rate will still decline from as high as almost 25% in February to closer to 10% by the end of 2021. It said that house prices could come under upward pressure as restrictions in construction could see new home supply fall to 15,000 from 21,000 in 2020.

More positive was the rise in the ESRI/KBC consumer confidence survey for March, which hit its highest level in a year. Optimism for a vaccine rollout was cited as underpinning sentiment, while many consumers also stated an intention to spend savings amassed during the lockdown period.

Across the Irish Sea, UK unemployment fell for the first time since the pandemic began – the Office of National Statistics said the jobless rate dipped from 5.1% to 5.0% in the three months to December. This amounts to about 1.7 million unemployed people. Still, it was previously reported that another 4.7 million were furloughed in January as many businesses remained closed.

US Jobless Claims Improve
Economic data releases in the week were somewhat mixed. On the upside, weekly jobless claims came in at 684,000, the lowest level since the onset of the pandemic, reflecting the increasing vaccination levels and reopening of the economy.

While the US National Association of Realtors said that existing home sales fell in February by 6.6% from January, more than anticipated, the year-on-year increase was 9.1%. The decline in February was driven largely by severe winter weather while the NAR noted that the inventory of available homes was down almost 30% year-on-year, maintaining upward pressure on prices. New home sales also came in shy of consensus expectations, down 18.2% in February.

Rounding Up…
Brent crude oil prices had a rocky week, ultimately finished the period virtually unchanged after rising about 4% on Friday. The blocked Suez Canal was a factor in the Friday gain as shipments from the Middle East backed up.

Despite rallying on Friday, Japan’s Nikkei 225 index still lost over 2% in the week. The government’s budget passed Japan’s parliament on Friday, providing significant funding to help ease the burden from pandemic-related costs.

Eurozone bonds had a good week as the deteriorating COVID situation in Europe contributed to a fall in yields; for 10-year bonds, German yields fell from -0.29 to -0.35%, Irish yields fell from 0.06% to 0% and Italian yields fell to 0.62% from 0.67%. Similar-dated US and UK yields also fell to 1.67% (from 1.73%) and 0.76% (from 0.84%) respectively.


Source: All information is from Bloomberg Finance LP as at Friday 26 March 2021 unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. This information should not be considered a recommendation to invest in a particular security or to buy or sell any security shown. It is not known whether the securities shown will be profitable in the future.


A Week on the Markets

WIR_weekly returns_240720.jpg
Source
: Bloomberg Finance LP. Capital returns in local currency for the week to Friday 26 March 2021.

Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.

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Agenda

11.45 Registration
12.00 Presentations
13.30 Close

Date

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Zunfthaus zur Waag
Münsterhof 8
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Agenda

11.45 Registration
12.00 Presentations
13.30 Close

Date

Lorem ipsum dolor sit amet
Zunfthaus zur Waag
Münsterhof 8
8001 Zurich

Speakers

Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets
Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets
Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets

Speakers

Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets
Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets

Speakers


Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets

Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets

Name Name Name
Senior Multi-Asset Strategist,
State Street Global Markets