Weekly Market Update

Author : Rachel Poole
Date : May 8, 2021

Global Market News

Global equities gain on the week
Global equities made gains this week. The S&P 500 and Dow Jones ended the week up 1.23% and 2.67%, respectively, while the Nasdaq closed down 1.51%. The yield on the US 10-year Treasury dropped slightly to 1.57% and the price of a barrel of West Texas Intermediate crude oil increased nearly 2% to reach $64.82. Volatility, as measured by the CBOE Volatility Index, decreased almost two points, ending the week at 16.77.

April trading data reveal new trends
April trading data revealed several interesting trends that have guided markets over the last few months. Inflows into equities were stronger than the first three months of the year and included record flows into ESG (environmental, social, and governance) and thematic tech. Data also shows that investors have moved away from mega-cap growth stocks and toward companies who are expected to benefit from reopening economies. Additionally, reports from Fidelity Investments show that 40% of new accounts were opened by retail investors that are 35 years of age or younger, displaying a year-over-year increase of more than 200%.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 156,000,000 Global Covid-19 deaths: 3,260,000
US Confirmed Covid-19 cases: 32,600,000 US Covid-19 deaths: 580,000
*As of Friday evening

States offer incentives as vaccine rates decline
As vaccination rates begin to decline in the US, states and cities have begun offering incentives for residents who receive a Covid-19 vaccine. For example, the state of Maryland is offering $100 to state employees that get fully vaccinated, Detroit is giving out $50 prepaid debit cards, and New Jersey is offering free beer to anyone over 21 who shows their vaccination card at participating restaurants. As of Thursday, the US was averaging 2.3 million shots per day which is down 32% from the peak in April. Public health experts are concerned the decline in vaccination rates could threaten the country’s ability to reach “herd immunity”. In other vaccine news, the Food and Drug Administration is preparing to authorize the Pfizer-BioNTech vaccine for adolescents 12-15 years old by next week.

Geopolitics Spotlight

Protests in Colombia become deadly
Thousands of Colombians have taken to the streets in protest against a controversial tax reform bill. Colombian President Ivan Duque’s proposed tax reform, which has been withdrawn in light of the protests, has outraged citizens because it would increase taxes on individuals and businesses in an effort to raise nearly $6 billion. Critics of the bill say the tax hikes would disproportionately impact middle and working classes, especially in the middle of a pandemic. At least two dozen people have been killed and more than 800 injured as police have cracked down on protests.

Netanyahu fails to form Israeli government
Israeli Prime Minister Benjamin Netanyahu has once again failed to form a government, prolonging the country’s historically long period of political gridlock and likely ending his position as Israel’s longest-serving leader. President of Israel Reuven Rivlin has given Yair Lapid, the leader of the centrist Yesh Atid party, 28 days to form a coalition government. In the meantime, Netanyahu will continue in his role as caretaker prime minister.

US Social & Political Developments

Florida signs new voting restrictions
Governor of Florida, Ron DeSantis, signed legislation that seeks to restrict voting by mail as well as voting by use of ballot drop boxes. Texas is also moving forward with a similar bill to prohibit officials from mailing absentee ballot applications, among other things. The action reflects the ongoing discontentment of Governor DeSantis and other Republican leaders who believe the 2020 election was marred by voter fraud.

Biden increases refugee cap
After receiving widespread criticism for extending the Trump administration’s refugee cap of 15,000, President Joe Biden said this week that he will increase the cap on refugee admissions into the US through September to 62,500, quadrupling the record-low annual limit. In the next fiscal year, which begins in October, he has pledged to double the number of refugee slots to 125,000 and has said the previous limit “did not reflect America’s values.”

Corporate/Sector News

Commodity prices rise as companies combat rising demand and supply shortages
The prices of commodities and materials are become more and more expensive as supply shortages and supply chain vulnerabilities force companies to raise prices. The issue is affecting the entire commodity sector, from cotton to lumber to semiconductors as manufacturers struggle to access enough raw materials to meet the rising demand of shoppers who are eager to spend their stimulus checks. The rise in prices is an indicator of inflation which is causing some concern among investors and policymakers who are hoping the price hike proves transitory.

CME group to close open-outcry pits
The CME Group is permanently closing most of its open-outcry pits in Chicago. The only part of the CME’s iconic trading floor that will remain open is its Eurodollar options pit, which is one of the exchange’s largest marketplaces. Most of the CME’s pits were already replaced by online trading but the rest were temporarily closed in March 2020 at the onset of the pandemic.

SpaceX gains traction for its satellite internet service
So far, SpaceX has received more than 500,000 orders for its satellite internet service which is designed to beam high-speed internet via satellites to anywhere in the world. SpaceX is dominating the race for global internet coverage while Facebook and Alphabet have had to abandon plans for their satellite internet projects. SpaceX has now launched more than 1,500 internet satellites into low earth orbit.

Image of the Week

Video of the Week

Bicentenary of Napoleon: A controversial legacy
Source: France24