US stocks at record high, Bitcoin at $60k - our top 10 stories from last week

Read the 10 stories to remember from the week which ended March 12th, 2021.  

 

Story #1: Stocks move back into record territoryAfter posting mixed results the previous week, the major U.S. stock indexes recorded solid gains amid a modest comeback for technology stocks that had recently declined. The Dow gained nearly 4% while the S&P 500 and the NASDAQ both added more than 2%. The Dow crossed the 32,000 points level for the first time on Wednesday, then pushed its record higher on Thursday as the S&P 500 and Russell 2000 also posted historic highs. Progress in the fight against the coronavirus also seemed to support sentiment. Signing of Fiscal stimulus by President Biden and positive news on the pandemic side (new high of weekly vaccine doses in the U.S, decline in US daily count of new cases) supported investors sentiment.

Story #2: NASDAQ roller coasterInvestors seemed to remain focused on fluctuating longer-term bond yields and the discount they place on future earnings, resulting in substantial swings in the technology-oriented Nasdaq Composite Index. The NASDAQ fell into a correction on Monday, as its 2.4% decline that day left the index 10.6% below its record high set on February 12 of this year. However, the technology stock-oriented index rebounded sharply, recording a cumulative gain of 6.3% over the course of Tuesday, Wednesday, and Thursday.

Story #3: Value leads growthFor the fourth week in a row, U.S. value stocks outperformed growth stocks—a short-term shift that threatens to reverse the growth style’s run of outperformance in recent years. A value stock benchmark gained 3.2% while a growth benchmark added 2.5%; over four weeks, the value index rose 5.9% while its growth counterpart fell 5.5%. Shares in heavily weighted automaker Tesla rebounded after the previous week’s sell-off, lifting the consumer discretionary sector. The small real estate sector also outperformed within the S&P 500, while health care and energy shares lagged. US Bank stocks soared to a new record high, taking out the 2007 financial crisis highs.

Story #4: Yields remain unsettled as Biden signs Fiscal packageThe recent price slide in the U.S. Treasury bond market continued, as yields extended their rise. After closing the previous week at 1.55%, the yield of the 10-year note slipped as low as 1.50% on Thursday before surging on Friday to 1.63%—the highest in 13 months. On Thursday, President Biden also signed into law the USD 1.9 trillion American Rescue Plan Act, following its passage in Congress on a party-line vote. Treasury Secretary Janet Yellen stated that direct USD 1,400 payments to most Americans, a key part of the bill, should begin showing up in bank accounts as early as the weekend.

Story #5: US jobless claims hit new low, Consumer sentiment is surgingInitial weekly U.S jobless claims fell to 712,000, the lowest level since November—although, as some pointed out, this was still above the highest level reached during the Great Recession of 2007–2009. Continuing claims fell to 4.1 million, below expectations and the lowest level in a year. The gradually healing labor market seemed to be reflected in the University of Michigan’s preliminary gauge of consumer sentiment in March, which rose more than expected and hit a new pandemic-era high of 83—up from a low of 73.5 last April but still well below the pre-pandemic level of 101 in February 2020.

Story #6: European stocks rise as ECB pledged to buy more bonds Shares in Europe rose as the U.S. prepared to inject a massive amount of fiscal stimulus into the economy and the European Central Bank (ECB) pledged to buy more bonds to counter rising borrowing costs. Prices of eurozone government bonds rallied after the European Central Bank on Thursday pledged to speed up its purchases of sovereign debt. The acceleration of the bond-buying stimulus program came in response to an increase in borrowing costs and bond yields. On the Covid side, Italy said it would impose a nationwide lockdown over the Easter weekend after an uptick in the number of coronavirus infections. The EU’s vaccination efforts suffered another setback when Italy banned the use of a batch of the Oxford-AstraZeneca vaccine, after reports of serious adverse effects.

Story #7: UK GDP shrinks less than forecastUK economic output shrank 2.9% sequentially in January due to a sharp slowdown in the services sector, official data showed. Economists in a Reuters survey had forecast a 4.9% contraction, likely reflecting the new lockdown measures instituted at the start of the year. Exports of UK goods to the EU, excluding gold and other precious metals, fell 40.7% from the preceding month. UK imports from the EU tumbled 28.8%.

Story #8: China stocks pulled back despite strong trade performanceChinese stocks posted a weekly loss as the Shanghai Composite Index fell 1.4% and the large-cap CSI 300 Index shed 2.2%. China’s consumer price index (CPI) declined 0.2% in February from a year earlier, while the producer price index (PPI) jumped 1.7% year on year at the fastest clip since 2018, according to Reuters. In other economic readings, China’s merchandise exports for January and February combined surged about 61% year on year in U.S. dollar terms, while imports rose 22%, according to customs data. Both sets of trade data beat economists’ expectations and were attributed to last year’s coronavirus-depressed levels. Even so, most analysts viewed China’s underlying trade performance in the first two months of this year as remarkably strong across the board.

Story #9: Mixed commodity markets Gold found support at $1700 once again this week. Oil was up on the week but WTI Crude Oil faded on Friday, falling back below $66 as the dollar was a rollercoaster over the week, though finishing almost unchanged.

Story #10: Bitcoin breaks $60,000On Saturday morning, bitcoin crossed above the major resistance level at $60,000. A burst of trading erupted as a stop-loss cascade was triggered, liquidating $250 million worth of shorts in just a few short hours. The options-market now assigns an 8% probability that bitcoin will trade there by the end of April and a whopping 20% by the end of the year. The Bitcoin is now up more than 1,000% over the past year.

 

Source: www.zerohedge.com, T Rowe Price, John Hancock.  

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