Weekly Round Up
UK markets ended this week in the red, with the FTSE 100 Index having fallen -0.75% at the time of writing. The British economy however grew +3.6% in the three months to May 2021, which is strongest growth seen since November and is slightly less than the market forecast of +3.9%. Supply shortages disrupted car production which offset a strong rebound in the hospitality sector. The volume of goods and services produced in the UK grew by +0.8% month on month, less than economists had expected after an exuberant rebound in April as the economy began to reopen. This marked the fourth consecutive month of growth and leaves the economy just +3.1% below where it was in February 2020, before the Covid-19 pandemic hit.
European stocks traded in the green on Friday, attempting a rebound from big losses in the previous session that sent the DAX 30 to a 6-week low. However, they are still set to end the week in the red amid growing concerns about the strength of the global economic recovery. The major indices in Europe closed sharply lower on Thursday with the DAX in Germany and the FTSE 100 in the UK falling -1.7% and the CAC 40 in France dropping -2%. Even with Friday’s advances these major indices are still set to end the week lower. The underperformance of European stocks relative to the US this week is a reminder of how much more heavily weighted growth-sensitive cyclical stocks are in Europe.
In the US, the S&P 500 fell by -0.22% and the Dow Jones Industrial Average fell -0.72%. Whilst US stock futures were higher in early morning trading on Friday, the country has not been able to escape concerns of a slowdown in economic growth. The proliferation of the highly infectious delta Covid variant fuelled worries about the global economic recovery. The market continues to remain on edge. The potential for easing of the stimulus is posing some downside to risk assets like equities. We are likely to see more volatility ahead of the second quarter 2021 earnings season that starts next Tuesday.
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