Week from 15 to 21 February 2021
US stocks rally stalled after the long holiday weekend (President’s Day on Monday 15th). The Dow Jones Industrial Average edged up 35.92 points, or +0.11% week-over-week, to 31,494.32, while the S&P 500 slipped -0.71%. The Nasdaq Composite struggled (-1.57%) against a backdrop of growing concern among investors around valuations of Big Tech firms (Apple down 4.06% WTD, Facebook down 3.30%, Microsoft down 1.64%). Tech was therefore one of the biggest decliners over the week (-1.92%), just behind health care (-2.45%) and utilities (-1.99%). Energy (+3.06% following a cold snap across the U.S. and a draw of 5.8 million barrels on crude stockpiles last week) and financials (+2.81%) led the pack. Bank stocks indeed benefit from the rise in Treasury yields (U.S. 10-year bond yield topping +1.34% for the first time since February 2020).
Overall, European equity markets did better (MSCI EMU up 0.21%) while APAC markets closed mixed. Indias NIFTY and Australia’s benchmark S&P-ASX 200 finished 1.20% and 0.19% down respectively, while Japan’s Nikkei and the Shanghai Composite index rose 1.69% and 1.12%.
In credit markets, investment grade corporate bonds suffered (-0.51% in the U.S. and -0.40% in Europe) as the reflation trade keeps yields higher. High-yield bonds were more resilient (+0.08% in Europe, -0.10% in the U.S.). By contrast, emerging debt fell heavily (-1.44% in local currencies).
In currencies, the U.S. dollar was a bit weaker with its index at 90.36 (vs. 90.48 a week ago). It is also worth noting that the EUR-GBP pair continued to crumble, below the 0.87 level, as the UKs efficient rollout of COVID-19 vaccinations spurred sterling inflows.
In commodities, gold fell 2.51% to $1,775.80/oz as the return on T-bonds becomes more attractive.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2021-02-19/global
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