Weekly Market Update

Author : Rachel Poole
Date : May 1, 2021

Global Market News

Global equities have mixed week
Global equities were a mixed bag this week. The S&P 500 ended the week up 0.02%, while the Dow Jones and Nasdaq closed down 0.50% and 0.39%, respectively. The yield on the US 10-year Treasury rose slightly to 1.62% and the price of a barrel of West Texas Intermediate crude oil increased more than 2% to $63.46. Volatility, as measured by the CBOE Volatility Index, rose to 18.7.

US economic growth accelerates
This week, the US reported that gross domestic product expanded at a 6.4% annual rate in the first quarter of 2021. At this rate, the losses from the pandemic will be absorbed by the middle of this year. Contributing to the growth was a record-setting 21.1% rise in personal incomes and a 4.2% increase in personal spending in March. Following the most recent round of government relief checks, the US savings rate rose from 13.9% in February to 27.6% in March. On the other hand, the economic rebound is not faring as well in the Eurozone which reported a 0.6% quarterly contraction for Q1.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 151,000,000 Global Covid-19 deaths: 3,170,000
US Confirmed Covid-19 cases: 32,300,000 US Covid-19 deaths: 575,000
*As of Friday evening

Covid continues to devastate Brazil and India
This week, Brazil topped 400,000 deaths from the Covid-19 virus, trailing only the US in total deaths and accounting for 13% of total global Covid-related deaths. Due to a shortage of vaccines and government mismanagement of the crisis, less than 7% of Brazilians are fully vaccinated. Brazilian President Jair Bolsonaro has faced harsh criticism throughout the pandemic for downplaying the virus and opposing lockdown measures. A legislative committee has been put together to investigative Bolsonaro’s pandemic response as the country reels from the pandemic. As we reported last week, India has become the epicenter of the pandemic and continues to exhibit record-breaking death rates and case numbers. Several countries, including the US, are pledging aid to India.

Geopolitics Spotlight

US embassy staff to leave Afghanistan amid threats of violence
The US has ordered non-essential staff to leave the embassy in Afghanistan amid concerns of increased violence. The Taliban has threatened to launch attacks in Afghanistan if the US does not withdraw troops by the May 1^st withdrawal deadline established under last year’s US-Taliban agreement. However, President Biden has extended the withdrawal date to September 11th.

Palestine postpones elections
Palestinian President Mahmoud Abbas has postponed Palestine’s parliamentary elections amid a political dispute over voting in Israel-controlled East Jerusalem and tensions in his Fatah party. In the past, Israel has allowed some Palestinians living in the East Jerusalem area to vote, but Israel has no government to approve Palestine’s voting request this time around. Abbas is blaming Israel for the voting uncertainty, but critics suggest Abbas is using the Jerusalem issue as an excuse to avoid the elections that the Fatah party may lose to the opposition party, Hamas which controls the Gaza strip. The delay of the elections, which would have been the first in 15 years, has sparked protests from Hamas, creating political unrest for the Palestinians.

US Social & Political Developments

Biden addresses Congress
In his first address to Congress, US President Joe Biden delivered his plan for reshaping the US economy. President Biden called for major investments to boost the country’s competitiveness, asked for trillions of dollars in spending on infrastructure, education, childcare, etc., and advocated for immigration and police reform in his speech. He also re-confirmed his commitment to work with US allies to address nuclear threats, Russian aggression, and China’s unfair trading practices.

US pledges Covid-19 vaccines to other countries
The White House announced this week that the US will share up to 60 million doses of the Oxford-AstraZeneca Covid-19 vaccine with other countries. The Food and Drug Administration will have to approve the vaccine, which has not yet received authorization in the US, before it is sent abroad. The pledge is part of the Biden administration’s effort to help global vaccination efforts as the virus surges in other parts of the world.

Corporate/Sector News

Big tech earnings surpass expectations
Amazon, Apple, Google, and Microsoft reported earnings this week, far surpassing expectations. Amazon’s first quarter profits more than tripled to $8.1 billion while revenues were more than $100 billion for a second quarter straight. Apple shares rose more than 2.5% on Wednesday after the company reported double-digit growth in every one of its product categories and announced a dividend hike of 7%. Google’s profits surged 162% last quarter while revenue hit a record $55.3 billion, and Microsoft recorded the company’s largest quarterly revenue growth since 2018.

China imposes sweeping financial restrictions
China has imposed sweeping restrictions on the financial divisions of several fintech companies amid a government crackdown on the fast-growing sector. The restrictions affect 13 companies, including Tencent, ByteDance, and JD.com. The move is another example, in addition to the cancellation of the Ant Group IPO, of escalating tensions between the private sector and the government.

Blue Origin loses NASA contract to SpaceX
Jeff Bezo’s space company, Blue Origin, has filed a protest against NASA’s decision to award Elon Musk’s SpaceX a contract to build the next spacecraft to land astronauts on the moon. Blue Origin called NASA’s decision “flawed” and said it “eliminates opportunities for competition”. However, NASA had designed the project as a multi-tiered competition to get private sector companies to produce the most cost-effective, innovative and safe solutions. SpaceX, which has already sent three missions to the International Space Station, is the first private company to be awarded NASA authorization for a commercial spacecraft system.

Image of the Week

Mapped: The 25 Richest Countries in the World

Video of the Week

Video: It’s known as the ‘Tree of Life’
Source: World Economic Forum