Advanced Share Registry : Market News 22 June 2021

Most investors, assessing asset aspects, realize there's still no alternative to equities strengths. And so, stocks rebounded Monday, with all significant indices recouping Friday's losses born from the Federal Reserve's updated outlook for rates. The Dow gained 587 points, or 1.76%, for its best day since March after its worst performance since October produced a 3% slump last week, while the S&P 500 was up 1.4%, with all 11 sectors finishing higher. The benchmark 10-year yield clawed back above 1.49% after touching highs of 1.59% last week. The yield curve remains flattened since the Feds update though banks stocks had an intense day as long-dated bond yields rose, and short-dated yields eased.

Most of the market's rebound on Monday was a revived reflation trade, as investors persist with the cyclicals to take advantage of the sell-off in popular names. It's also fair to frame this volatility as the market lacking solid convictions for the moment, but yield curves are likely to be a significant reference for debate now and in the future. Consequently, the 'cyclicality trade' has been repriced.

Goldman Sachs chief U.S. equity strategist increased his 2021 estimate on household net equity buying to $400 billion from $350 billion. Thats significant as the first quarters most abundant source of equity demand, with net purchases of $172 billion, came from households who allocated a mountainous 44% of their assets to equities. The dot com boom sucked up 46% of household equity before the bad dot com boom ensued. Before being written off as a dumb crowd, remember that inflation favours equities over bonds or cash.

Climbing long-dated bond yields produce a more significant boost to earnings for more mature cyclical companies than it does for technology businesses as they have a higher sensitivity to inflation and economic growth. The small-cap Russel 2000 gained 2.1%, while the excellent benchmark for global economic activity- WTI crude oil- also rose 2.7% above $73 a barrel. One hundred and two tech stocks collectively known as the Nasdaq100 achieved a moderated 0.62% after outperforming in the mini slump.

The S&P 500 achieved 19 new 52-week highs and no new lows, as opposed to the Nasdaq Composite (all Nasdaq domestic and international stocks listed on the Nasdaq), recording 62 new highs and 49 new lows.

Performers include Morgan Stanley +2.2%, Bank of America +2.5%, Boeing +3.3%, and Caterpillar for +2.1%. Microsoft Corp climbed 1.7% for an intra-day record. Moderna Inc achieved 4.9% on expectations two new production lines at a COVID-19 vaccine manufacturing plant will be added.

So, markets remain optimistic about the economy despite last week's jobs underperformance but in the background, up to thirty predominantly Republican states are well behind Biden's vaccine targets. The Delta variant already accounts for six per cent of U.S. infections, and American Cities, states, and private organizations are keen to limit its spread further by offering an array of incentives like the free cannabis campaign promoted by Washington state.

Dr Fauci said the extent of the variant's push into the United States appears to be slowed by vaccines. While one vaccine dose of Pfizer-BioNTech and AstraZeneca offers just 33 per cent protection against Delta Covid-19, it rises to 88 per cent after the second shot in preventing symptomatic disease.

Meanwhile, the U.S. State Department is relaxing travel restrictions for dozens of countries. Fifty-eight countries and territories will no longer be in the 'Do Not Travel,' category and become Level 3 or 'Reconsider Travel,' destinations. Twenty-seven were promoted into the first two levels, where travellers are advised to increase caution or exercise standard precautions.

US Dow Jones	33876.97	+586.89	+1.8%
US S&P500	4224.79	+58.34	+1.4%
US Nasdaq	14141.48	+111.104	+0.8%
UK FTSE	7062.29	+44.82	+0.6%
German Dax	15603.24	+155.2	+1%
Gold futures ($US/oz)	1782.9	+13.9	+0.8%
Spot Iron Ore ($US/t)	206.55	-10.75	-4.9%

While the U.S. Fed's actions have pressured commodities, Chinas plans to tap national metals reserve also crushed prices, with futures for both iron ore and copper down significantly. Europe's' STOXX 600 index gained 0.7% after losing 0.8% at the start of trading, rescued by comments from central bank head Christine Lagarde's' increased optimism for a speedy economic recovery this year. Autos gained 3%, while the EU's massive chemicals sector reacted for a +1.7% gain. Our futures are up 103 after yesterday's 133-point loss.

Disclaimer:
Produced by Advanced Share registry based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, neither Advanced Share registry (ABN 14 127 175 946) nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual's objectives, financial situation and needs and, if necessary, seek appropriate professional advice. This report does not purport to be a complete statement or summary.