The return of growth stocks, oil barrel above $70, China and the U.S. bonding again: our top 10 stories of the week

Read the 10 stories to remember from the week which ended June 11. 

#1: Falling treasury yields and the return of growth stocks

Longer-term bond yields fell to 1.459%, which helped push up the S&P 500 index to yet another all-time high last week. The yield decline boosted growth stocks as it reduced the implied discount of future earnings and weighing of financial by threatening bank lending margins. The Nasdaq Composite Index outperformed and marked its 4th consecutive weekly gain, with healthcare stocks ahead, boosted by gains of Biogen, the company that proposed a novel Alzheimer’s treatment.

 

#2: England will most likely delay its reopening

England’s full reopening might be delayed for at least some weeks, as the country now struggles with a faster-spreading Covid variant called “Delta”. UK Prime Minister Boris Johnson communicated that the rates of infections and hospitalizations were increasing, and that the decision on how to react in the best way possible would be announced on June 14th. According to the Financial Times, civil servants are now drawing contingency plans to delay the lifting of restrictions.

 

#3: European stocks keep performing

Shares in Europe also managed to keep rising during their fourth consecutive week, boosted by the European Central Bank (ECB) as it pledged to keep buying bonds at the same rates into the coming quarters. The STOXX Europe 600 Index was up 1.09%; France’s CAC 40 Index rose 1.30%; Italy’s FTSE MIB Index advanced 0.57%. Only Germany’s Xetra DAY remained little changed, while even the UK’s FTSE 100 Index rose by 0.92%.

 

#4: US Inflation fears remain, but it should remain under control

Inflation fears seemed to continue to dominate sentiment. 10-year US Treasury note decreased gradually throughout the week, pushed by a diminishing belief that the Fed would keep its easy monetary policy for a while and that the inflation experienced is only temporary. The annual headline for inflation reached a 13-year high of 5.0%, while the one-month reading was of 0.6%, boosted by a jump of used car prices. However, on a longer-term basis, a survey conducted by the University of Michigan showed than Americans believed in an inflation of 4%, lower than the previous month at 4.6%.

 

#5: ECB maintains its bond-buying policy

The European Central Bank said that it would maintain its emergency bond-buying policy at an even higher pace next quarter, although the central bank’s forecasts call for higher rates of inflation and economic growth. Regarding inflation in Europe, Christine Lagarde, the ECB’s president, said that it would increase this year to slow back down in 2022. The ECB expect a 1.9% inflation in 2021, up from the previous estimation of 1.5%. The global eurozone economy is expected to grow 4.6% this year and 4.7% next year, a 60-basis points increase from the previous ECB forecast.

 

#6: Japan slowly wakes up

Stock market returns in Japan were more or less unchanged this week, with a Nikkei 225 Index up only 0.02%, while the TOPIX Index fell 0.26%. If the domestic economic seems rather shy, the sentiment was boosted by the lift-off of emergency coronavirus-linked restrictions. The sentiment was also boosted by the fact that the Japanese GDP shrunk by lest than expected, contracting at by an annualized 3.9%, vs. a preliminary prediction of negative 5.1%.

 

#7: China sees its stock go down, but rebinds relationship with the US

Chinese stocks fell for the second consecutive week, with the CSI 300 Index falling by 1.1% and the broader Shanghai Composite Index dropping 0.1%. The global sentiment was a little dimmed by renewed Covid-19 controls in the face of a fresh outbreak. On a positive note, though, the state media communicated that the U.S. and China agreed to spark up communication again, with the goal to improve trade and investment ties. President Biden also said he would review Trump’s decision to ban Chinese mobile apps like TikTok and WeChat.

 

#8: Oil on the rise, topping $70 a barrel

U.S. Crude oil prices rose more than 1%, which marked their third weekly consecutive gains. The barrel price reached prices above $70 for the first time in more than two and half years. This situation contrasts with even less than a month ago, when the commodity was trading a $62 a barrel, as recently as May 20. Supply comes amiss and the demand is expected to grow as the world gets moving again. Even the International Energy Agency was urging OPEC+ to increase production this week, as the demand will soon outweigh a too-scarce supply.

 

#9: Fastly turned off the internet for an hour

On Tuesday morning, many websites went dark for almost an hour, including Netflix, Spotify, Amazon, Reddit, the New York Times and even the UK government. This all happened because Fastly, a content delivery network, encountered a glitch in its system. Fastly basically makes sure that data is distributed faster to users by hosting it on servers distributed across the globe, to avoid longer travel times and bottlenecks. With so many websites down at the same time, many were concerned about out beloved internet being so dependent on a few actors. The importance of such a service outweighed the negative news of the glitch, and the stock was up 15% for the week.

 

#10: Volatility is gone: back to stability?

Investor’s expectation of short-term stock market volatility went back down to the lowest level since the beginning of the pandemic. The Cboe Volatility Index slipped to 16 on Friday: it had not been as low since February 2020, before markets crashed and rose back up by impressive percentages.

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