In the first session of the week, investors' mood improved despite an apparent deadlock in negotiations for a new fiscal stimulus package in the US. Stock indices rose in most trading floors and gains were particularly high in the US, where the surge in tech companies pushed the Nasdaq 100 to its biggest advance since April.
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Investors traded with an optimistic tone ahead of the US Presidential elections as October's manufacturing sentiment data surprised to the upside in most regions. In particular, Spain's manufacturing PMI rose from 50.8 in the previous month to 52.8, the euro area's to 54.8 from 54.4 and the manufacturing ISM for the US rose to 59.3 from 55.4.
In the US, the race for the White House is still very tied. Joe Biden won Wisconsin’s and Michigan’s electoral votes as the last ballots in those states were counted, but the outcome of the election might not be decided for days.
Financial markets were mixed in the last session of the week amid hopes for a COVID-19 vaccine, the advance of the second wave and growing tensions between the US Treasury and the Federal Reserve.
Investors traded in a mixed mood in the first two sessions of the week. EM stocks were mixed and European equities nudged down, while U.S. stocks continued to advance on the back of health equities (the FDA signaled it will give the go-ahead to the Pfizer-BioNTech vaccine soon) and on greater hopes for a new fiscal package.
In yesterday's session investors continued trading with moderate optimism. Despite the evolution of the pandemic and the weekly 23k increase in initial unemployment claims in the US, hopes that the fiscal stimulus would be finally unveiled led the main US stock indices to new record highs.
In the last session of a volatile week, stock indices declined across the board and yields on sovereign bonds edged down in the euro area and in the US. In particular, the yield on the 10-year US Treasury fell by 12 basis points and fluctuated again below 1.50%.
In the first session of the week, investors traded with a positive and risk-on mood. The release of improving manufacturing PMI data in most countries (with the exception of China) and expectations that the vaccination campaign will be effective contributed to the optimism in financial markets.
Investors traded in a mixed mood in the last session of the week. While European and emerging-market equities declined across the board, U.S. stocks bounced back from losses on the back of stronger-than-expected labor market data (nonfarm payrolls + 379k in February) and their turnaround reversed last week’s losses in the S&P 500.
In yesterday's session investors traded with a positive mood as the IMF revised upwards its macroeconomic projections for most advanced and emerging economies. The more vigorous recovery is driven by the fiscal stimulus packages and the vaccination campaign gathering pace in the next quarters.
Yesterday, investors traded in a low volatility environment as the Fed's last meeting minutes reiterated its intention to keep the monetary policy stance unchanged for some time. Nevertheless, as it was anticipated in the dot plot, several members argued that they would favor raising rates earlier than the FOMC’s median view.
Investors traded with optimism, following upbeat corporate earnings and signs of further improvement in the labour market, with initial jobless claims in the US edging down last week to the lowest level since the start of the pandemic.
In yesterday's session, investors weighed the reopening of economies against inflationary pressures concerns. On the latter, nevertheless, ECB's Villeroy de Galhau said that the inflation spike in the euro area is likely to be temporary and that the monetary policy stance will remain very accommodative for a long time.
The ADP National Employment Report showed private payrolls increased by 978,000 jobs, the biggest increase since June last year. Additional figures of the services sector showed signs of economic improvement. On the other hand, President Joe Biden may be open to hike the corporate tax rate below 28%.
Investors ended the week on a positive note, following the release of solid labour market data in the US: non-farm payrolls rose by 850K in June while the unemployment rate remained broadly stable at 5.9%. As a result, equity indices rose in both sides of the Atlantic, reaching new records in the US.
In the first session of the week, investors traded with a risk-off mood amid rising COVID-19 cases and concerns that the Delta variant might delay the economic recovery. Demand for safe haven assets (such as US Treasuries, the Swiss Franc or the Japanese Yen) increased.
Yesterday investors paused their concerns on the evolution of the pandemic and traded with an optimistic mood amid better-than-expected corporate results. Since the start of the earnings season, more than 85% of the S&P 500 companies that have released results have beaten analysts’ expectations.
Asian stocks dropped markedly on Monday, following the crackdown by the Chinese government on education and tech companies. Investors in Europe and the U.S., however, shrugged off the spike in volatility, bolstered by optimism over the corporate earnings season.
Markets tilted towards a risk-off mood in a session dominated by U.S. news. U.S., German and other core sovereign yields declined, euro area peripheral spreads widened, safe-haven currencies (such as the CHF and the JPY) appreciated against the USD (while the euro was roughly stable), and stocks exhibited a poor performance globally.
In the last session of the week, renewed concern over the coronavirus overshadowed positive economic data releases and markets retreated, reversing the gains recorded earlier in the week.