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Please see below ‘Markets in a Minute’ article received from Brewin Dolphin yesterday evening. The commentary provides an update on market performance as it reacts to current global news events.

Most major stock markets rose last week as the start of the US earnings season helped to offset concerns about a resurgence in Covid-19 infections.

The pan-European STOXX 600 added 1.2%, marking its seventh consecutive week of gains. Germany’s Dax rose 1.5%, despite chancellor Angela Merkel warning that the country was firmly in the grip of the third wave of the pandemic. The FTSE 100 advanced 1.5% after official data revealed the UK economy grew by 0.4% in February following a 2.2% contraction in January.

In the US, the S&P 500 gained 1.4% with healthcare and mining stocks performing particularly strongly. The release of earning results from several banking giants also helped to boost investor sentiment. The Dow added 1.2% and the Nasdaq gained 1.1%.

Over in Asia, the Nikkei ended the week down 0.3% amid a spike in coronavirus infections in Tokyo and Osaka. China’s Shanghai Composite fell 0.7% whereas Hong Kong’s Hang Seng managed a 0.9% gain.

Last week’s market performance*

  • FTSE 100: +1.50%
  • S&P 500: +1.37%
  • Dow: +1.18%
  • Nasdaq: +1.09%
  • Dax: +1.48%
  • Hang Seng: +0.94%
  • Shanghai Composite: -0.70%
  • Nikkei: -0.28%

*Data from close on Friday 9 April to close of business on Friday 16 April.

Dull start to the week as investors take profits

US stocks pulled back from record highs on Monday as investors took profits ahead of the peak of the earnings season. The S&P 500, the Dow and the Nasdaq closed down 0.5%, 0.4% and 0.9%, respectively. Nearly half of S&P 500 companies are set to release their first quarter results over the next two weeks, including the majority of the FAANGs.

European stocks also retreated slightly from record highs, following the weaker open in the US and rallying currencies. The FTSE 100 dipped 0.3% yet managed to stay above the 7,000 mark after figures from Rightmove revealed UK house prices rose by 2.1% in April to a record high of £327,797. This marked the second time in only five years that prices have increased by more than two percentage points in a month.

The FTSE 100 was down 0.4% to 6,972 in early trading on Tuesday following mixed employment data from the Office for National Statistics. The unemployment rate fell slightly from 5.0% in January to 4.9% in February, but 56,000 workers were cut from company payrolls in March – the first monthly drop since November.

UK economy expands in February

Last week saw the release of encouraging economic data in the UK. Official figures showed the economy grew by 0.4% in February as companies prepared for the easing of coronavirus restrictions. Growth was helped by the first rise in factory output since November, and a pickup in sales among wholesalers and retailers.

The data also suggested that trade between Britain and the EU partially recovered in February. Goods exports to the EU fell by 12.5% year-on-year in February, versus a 41.4% year-on-year decline in January. Imports declined 11.5% year-on-year in February, compared with a 19.2% drop the month before.

Despite this, UK GDP remained 7.8% below its level in February 2020, shortly before the pandemic struck. It was also 3.1% lower than its level in October, just before further lockdown restrictions hit the services sector.

Non-essential shops and outdoor hospitality venues reopened on 12 April, and it is hoped most restrictions will be lifted before the end of June.

US consumer spending rebounds

Over in the US, figures showed retail sales grew by an eye-catching 9.8% in March, far higher than the 5.8% monthly increase that analysts were anticipating. This followed the continued reopening of restaurants and retail, and a recovery from the severe weather-induced 2.7% contraction in February.

Meanwhile, weekly jobless claims plunged to their lowest level since the pandemic began, and a key gauge of factory activity in the mid-Atlantic region hit its highest level in nearly five decades.

US inflation data revealed headline consumer prices rose by 0.6% in March from the previous month and by 2.6% compared with the same period a year ago. The year-on-year gain was the highest since August 2018. Gasoline prices were the biggest contributor to the monthly increase, surging by 9.1%.

China sees record growth

China’s economy achieved year-on-year growth of 18.3% in the first quarter of 2021 – the biggest jump since the country started keeping quarterly records in 1992. Industrial production rose 14.1% year-on-year, while retail sales surged by 34.2%.

However, the headline growth figure was skewed by the huge economic contraction witnessed in the first quarter of 2020, when China imposed a nationwide lockdown at the peak of the Covid-19 outbreak. On a quarterly basis, China’s GDP grew by a far smaller 0.6% – well below expectations and slower than the revised 3.2% expansion recorded the previous quarter.

We will continue to publish further analysis and input as the UK enjoys an easing of lockdown restrictions. Please check in again with us soon.

Stay safe.