z-kolkiemz-kolkiem

The week in review

Markets moved higher, with the exception of Europe ex UK, as the MSCI All Country World Index finished up +0.1% in US Dollar terms and +1.0% in Sterling terms. However, all eyes remained focused very much on the bond markets despite the efforts of central bankers.
Share on facebook
Share on linkedin
Share on twitter
Share on email
Published 9 March
2 mins

What’s happened in markets?

KEY MARKET MOVEMENTS (% change)
 1WK1MO3MOYTD1YR3YR5YR
FTSE All Share2.072.192.613.264.122.365.90
Euro Stoxx 500.960.454.053.6312.046.437.42
S&P5000.84-1.004.232.5629.2814.3216.18
Japan Topix1.700.306.955.1028.156.299.08
MSCI Asia Pac.-0.24-3.808.725.0336.6710.2715.79
MSCI Emerg. Mkts.0.06-3.947.523.8432.067.3014.15
Jo’burg All Shares3.626.6015.5115.4132.749.208.88
UK Gov’t Bonds0.91-2.68-4.23-6.41-4.423.483.25
US Gov’t Bonds-0.83-2.01-3.01-3.56-2.054.672.55
Global Corp. Bonds-0.86-1.97-2.29-3.071.185.985.38
Emerg. Mkt. Local Currency Bonds-1.53-4.18-4.00-5.320.021.234.63

Figures in the respective local currencies as at the end of trading on 5/3/2021.

All the attention during the week of 1 March remained focused on the continued selloff in government bond yields and the impact of this on equity prices, particularly for technology growth stocks.

Central bank speakers tried to talk down yields, but with little success, including Federal Reserve (Fed) chair, Jay Powell, who pushed back on recent bond market moves by stating that there was unlikely to be any moves in interest rates until inflation reaches over 2.5%. However, Powell disappointed markets as many expected him to give more hints of potential intervention by the Fed – something which he was not prepared to do, especially in the case of the monetary committee wanting to pull down long-dated rates.

European Central Bank (ECB) officials also continued to make comments aimed at stemming the rise in yields. For example, the French central bank governor said that “in so much as this tightening (in financial conditions) is unwarranted, we can and must react against it, starting with … our (bond) purchases”. However, there was no evidence of an increase in ECB bond purchases during the week of 1 March, highlighting that central bankers’ words are not yet being backed up by central bank action. 

The economic data highlight was the US jobs release for February on Friday 5 March, as the US economy created 379,000 jobs in February. This increase in employment far exceeded consensus expectations and was more than double the number of jobs added in January. This also took the headline unemployment rate down to 6.2%. All this points to a sharp rebound in the US labour market, supported by a decline in coronavirus cases nationwide and a loosening of lockdown restrictions. The strong jobs data also accelerated the sell-off in US government debt on Friday 5 March, with the yield on the 10-year Treasury bond climbing to its highest level since February 2020.

The other big story last week, was the sharp move higher in oil prices after OPEC+ agreed to postpone increasing its supply until later in 2021. In fact, on Monday 8 March, Brent crude traded above US$70 per barrel, its highest level since October 2018, after Saudi Arabia reported an attack on the world’s largest crude terminal. It’s important to monitor oil prices at the moment as higher oil prices are also fuelling higher inflation expectations, which in turn are impacting bond yields.

In markets, all markets were positive, apart from Europe ex UK (-0.50%), with the UK leading the way (+2.33%). Style-wise, value (+2.89%) continued to claw back performance versus growth (-0.97%), with energy (+7.89%) and financials +(3.76%) the best sectors, while information technology (-1.39%), an important part of the growth index, continued to lose support. Small capitalisation stocks (+0.63%) outperformed their large peers (+1.12%).

ECONOMICS  
 Latest

Consensus

Forecast

UK GDP (QoQ)1
UK PMI49.6
UK CPI (YoY)0.7
EU GDP (QoQ)-0.6
EU PMI48.8
EU CPI (YoY)0.9
US GDP (QoQ)4.1
US PMI55.3
US CPI (YoY)1.41.7

What’s happened in portfolios?

While equity markets were up during the week of 1 March, this was due to the rally on Friday 5 March, with US markets increasing by 3%. Throughout the remainder of the week, however, equity markets were volatile and generally nervous as bond yields rose throughout the week and were actually well down until the ‘dip buyers’ stepped up to the plate just before the close of play at the end of the week.

Investment grade bonds were slightly soft, led by the US, with investors continuing to worry about inflation and how the recently agreed US$1.9 trillion fiscal package will be funded. While a short bout of inflation is coming down the chute due to the large US fiscal support, on top of what the Fed is already doing through its programmes, this comes on top of a year of constraints meaning there’s lots of pent-up demand waiting to be unleashed when restrictions ease.

News flow on the investment trusts was quiet apart from another capital raise announcement in the renewable space – this time from The Renewable Infrastructure Group. This will come at 123p, presenting a 7p discount to the price it was trading before the announcement.

What's happening this week?

10 Mar • US Consumer Price Index | 11 Mar • ECB Interest Rate Decision | 12 Mar • UK January GDP

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.

 

If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Sources: Nedbank Private Wealth and (1) Reuters; (2) US Department of Labor; and (3) Bloomberg.

The value of investments can fall, as well as rise, and you might not get back the original amount invested. Exchange rate changes affect the value of investments. Past performance is not necessarily a guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios and is referenced for illustrative purposes only, not as a recommendation, not least as it may not be suitable. You should always seek professional advice before making any investment decisions.

Access more of our insights

Investing

Options for uncertain investors

19 Oct

   |   7½ mins

Many clients hesitate to invest. They have often realised the reasons why, but want to hold back given we live in uncertain times. Rebecca Cretney highlights the points she raises in her conversations, as well as the advantages and disadvantages for the options to be considered.

Investing

The week in review

19 Oct

   |   5½ mins

The week of 11 October saw inflation increase higher than had been expected in the US and raised the prospects of action by the Federal Reserve in its November meeting. Meanwhile, growth forecasts for developed markets were cut slightly as supply chain issues continue.

Investing

September's investment market commentary

18 Oct

   |   2 mins

During September, the economic and corporate environment remained positive, however some equity sectors are beginning to look fully valued.

Investing

The week in review

12 Oct

   |   5½ mins

The week of 4 October saw persistent inflation amid signs of slowing economic growth, with fears of stagflation stoked. While the US announced a disappointing new job number for September, but a fall in unemployment.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.

 

We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.  Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.

* Required fields

Contact Us

Please call us today on +44 (0)1624 645000. Our office hours are weekdays from 8am to 8pm (UK time), except for UK public holidays.

 

Or please complete and submit the below form and one of the team will get back to you as requested.

* Required fields

Search suggestions