UK Stock-Market
- The week started on a strong note continuing the trend of the previous week with the positive mood fuelled by rising optimism over economic recovery and vaccine rollout programs and hopes that the promised US stimulus package will be forthcoming soon. As the week progressed though, the early gains were largely given up with UK large cap stocks hindered by the continuing strength in the Pound which reached its highest level against the US dollar since April 2018, due in the main to the UK’s vaccine rollout success.
- UK inflation was reported to have risen by 0.7% on an annual basis. JPMorgan has suggested that inflation is “likely to start testing the Bank of England’s 2% target later in the year”.
- Eurozone composite PMI data released by IHS Markit showed that business activity was slightly higher in February but continues to contract.
- Rising bond yields are raising concerns about the sustainability of the rally in equities as investors may begin looking elsewhere for their returns.
- At the start of this week Boris Johnson is due to confirm the UK government’s plans to begin cautiously lifting coronavirus restrictions including the announcement that schools will re-open on 8th March. The World Health Organization will also be presenting their update on pandemic developments later today..
- Our Breadth indicator stayed positive but our Momentum Indicator, although still positive, ticked back down.
UK Market 19th February 2021
US Stock-Market
- The US stock-market finished the week a little higher than the previous week.
- Positive US economic data is fueling inflation concerns for some investors who fear good news may become bad news for risk assets. Market participants are monitoring the recent rise in US Treasury Yields with the benchmark US 10 year Treasury Yield reaching 1.3%, a twelve month high. Higher rates could encourage investors to rotate out of risk-assets and into bonds so the rise in yields will be closely watched. We also note that the price of oil has been rallying strongly recently with futures reaching 12 month highs.
- Bulls would point to optimism regarding further fiscal stimulus, progress in fighting the coronavirus and a better-than-expected fourth-quarter earnings season with 80% of S&P500 companies having already reported. With regards to the proposed stimulus package, Janet Yellen, US Treasury Secretary, told CNBC on Thursday, “I think the price of doing too little is much higher than the price of doing something big.”
- Our Breadth indicator stayed positive but our Momentum Indicator, although still positive, ticked back down.
US Market 19th February 2021
The Big Picture 19th February 2021
Market Sentiment 19th February 2021
U.S. Risk Barometer 19th February 2021
Europe Risk Barometer 19th February 2021
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