Week from 8 to 14 February 2021
US indices rallied to record highs ahead of the long US holiday weekend (President’s Day on Monday 15th). The Dow Jones Industrial Average rose 310.16 points, or +1%, to 31,458.40, the S&P 500 gained 48 points, or +1.23%, to 3,934.83 and the Nasdaq Composite gained 239.17 points, or +1.73%, to 14,095.47. Once again, small-capitalization stocks beat their large-cap counterparts (Russell 2000 up +2.51%).
Cyclical sectors like energy (+4.33% week-over-week – WTI crude up +4.61% as US oil stockpiles fell by 3.5 million barrels last week) and financials (+2% with bank stocks scooped up by investors in the wake of rising bond yields) led the pack amid stimulus hopes and Covid-19 infection rates declining in North America. Sentiment was also boosted by upbeat quarterly earnings. Among the biggest gainers, tech shone too (+2.3%), though Apple shares performed poorly (down -1.02% WTD) on reports that the Cupertino company was no longer in talks with the Hyundai Motor Group about developing autonomous cars. By contrast, the defensive utilities and consumer staples underperformed (-1.79% and -0.10% respectively). Similarly, consumer discretionary stocks (-1.26%) kept a lid on gains in the broader market with the automotive industry among the biggest decliners. As an illustration, General Motors slipped nearly 1.5% despite better-than-expected Q4 results. Indeed, investors are increasingly worried about growing costs resulting from the ongoing chip shortage.
Major European equity indices closed mixed (FTSE 100: +1.55%, CAC 40: +0.78% but DAX 30 down 0.05%) like APAC markets (Nikkei: +2.57%, Hang Seng: +3.02%, Nifty: +1.60%, but S&P ASX 200 down 0.49%).
Yields on US Treasuries continued to rise, with the 30-year bond yield topping +2.01% compared with +0.07% for the German Bund on the same maturity (+1.21% for the US 10-year bond yield vs. -0.47% for the German Bund).
Overall, corporate bond indices were positive week-over-week except for European investment grade corporate bonds (-0.02% vs. +0.22% for US investment grade corporate bonds; high-yield bonds: +0.13% in Europe, +0.20% in the US). Emerging debt was the best asset class in the bond space (+0.59% in local currencies).
Elsewhere, gold was up +0.59% ($1,821.60/oz) snapping a two-week bearish phase, while EUR/USD traded a bit higher (+0.77%) against a backdrop of weaker inflation data and dovish comments from Fed Chairman Jerome Powell.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2021-02-12/global
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