Market Mondays #30

Last week in the financial markets

  • Bitcoin surged to a new record high following Tesla’s $1.5bn-worth investment in the cryptocurrency and announcing that it would accept it as payment for its cars.
  • Oil prices reached their highest level in over one year as it reached $60 a barrel
  • Bumble had its IPO and closed up 64%
  • Mario Draghi was sworn in as the new Italian PM on Saturday following the collapse of the previous administration, leading to an Italian bond rally
  • Disney reported it earnings on Thursday, announcing it now had almost 95 million paid subscribers to Disney+
  • Donald Trump was acquitted of inciting an insurrection in last month’s deadly assault on the US Capitol at the former president’s second impeachment trial. 
  • Investors poured a record $58bn into stock funds this week while slashing their cash holdings according to the FT

Driving forces for the week ahead

Can the pound maintain its rally despite the hit from lockdown?

The pound has had a successful start to 2021, rising against the USD and the Euro. Since September 2020 it has even rallied by more than 8.7% against the USD. The success of the Pound since the beginning of the year stems largely from the successful rollout of the coronavirus vaccine at a quicker pace than other regions such as the EU. Whether this optimism will hold will heavily depend on the speed of the economic recovery as the FT reports, given a faltering UK economy and post Brexit trade frictions.

“We will need to see an end to lockdowns and restrictions before growth begins its natural ascendancy,” said Charles Hepworth, investment director at GAM Investments. 

Last week it had been revealed that the UK had avoided a double-dip recession, but the service sector’s performance still disappointed and stoked concerns on whether the BoE will be forced to respond soon. So far it indicated that it does not expect to bring the interest rates into negative territory, but given the ongoing lockdown, there is still uncertainty. . 

Bildergebnis für UK pound rise

With the ambitious 15 million vaccinations target being hit during the weekend, two days ahead of schedule and the government looking to vaccinate another 17.2 million people before the end of April the UK’s economy might be ready for a comeback soon. 

The next event investors will be bracing themselves for will be Wednesday when the UK’s inflation data is released. 

 What else we’re reading

  • London’s sway in Europe put to test as rival hubs make trading inroads (FT)
  • Is the party over for top tech stocks? (FT)  
  • Can the pound maintain its rally despite the hit from lockdown? (FT)  
  • Morgan Stanley May Bet on Bitcoin in $150 Billion Investment Arm (Bloomberg)  
  • Cathie Wood Risks Having Too Much Money and Not Enough Stocks (Bloomberg)  
  • Should governments in emerging economies worry about their debt? (Economist)  

This week’s key events and data releases

Monday: Japan Q4 GDP, Eurozone Industrial Production

Tuesday: Japan Trade Balance

Wednesday: US Retail Sales, UK CPI Inflation

Thursday: Japan CPI

Friday: US Manufacturing Flash PMI, UK Retail Sales, Eurozone Manufacturing Flash PMI

Leave a Reply

Your email address will not be published. Required fields are marked *