Equity markets were positive across the world last week, except for China where the concerns about the strength of its property sector and rising Covid-19 cases weighed on markets. In the UK, the central bank keeps interest rates unchanged,and, in the US, the long-awaited infrastructure bill is approved.
Last week’s performance – major stock markets
| S&P 500 | +2.00% |
| Nikkei 225 | +2.49% |
| CSI 300 | -1.35% |
| Euro Stoxx 50 | +2.65% |
| FTSE 100 | +0.92% |
Commentary
US:Supportive Fed,healthy economic data and strong corporate earnings
Stocks posted impressive weekly gains due some positive comments coming out of the country’s central bank, healthy economic data, and another strong week of companies reporting earnings. The week ended with the House of Representatives approving Joe Biden’s $1.2tn infrastructure bill late on Friday night.
Japan:Liberal democratic party win boosts investor sentiment
Japanese equities were buoyed over the week by the convincing election victory of Prime Minister Fumio Kishida’s ruling Liberal Democratic Party. Investors were encouraged by the prospects of stable government and policy continuity.Japan’s household spending fell in September amid consumers’ continued caution due to the coronavirus pandemic. However, news that Japan was set to ease its strict coronavirus-related entry ruleswas welcomed by investors.
China:Property sector concerns continue as Covid-19 cases rise
Chinese markets recorded a weekly loss as headlines about the property sector and a growing COVID-19 outbreak across the country dampened investor sentiment. Restrictions in many places raised worries about supply chain constraints dampening the country’s growth outlook.Data showed that factory activity continued to fall and is the latest sign that the economy was losing steam after a strong recovery. In addition to slowing industrial growth, the troubled property sector, and lukewarm consumption, China is also grappling with a worsening power crunch.
Europe: Interest rates to remain lower for longer
Shares in Europe rose on strong earnings results from companies and signals from the European Central Bank that interest rates would stay low for some time, saying that an interest rate hike is “very unlikely” next year. On the covid-front, cases are on the rise and the European region is now the “epicentre” of the global coronavirus pandemic, and on the economic front, data for September shows industrial production falling due to supply chain issues.
UK:Interest rates remain unchanged; Pound weakens and business activity rises
Following the Bank of England’s decision to keep interest rates unchanged, the Pound weakened which led to gains in equity markets. UK stocks tend to gain when the pound falls because many companies that are part of the FTSE 100 are multinationals with overseas revenues.On the economic front, business activity in the UK hit a three-month high in October, indicating that the economy continues its recovery from the pandemic. Data suggests the current Covid-19 wave has peaked.