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As we speculated in the Weekly Market Summary, the reaction to last Friday’s stunning US employment data has been positive with most of the major equity markets showing gains on the week (with equity markets closed on Friday and Monday for Easter, we had to wait until Tuesday to see how the market would react).
Although it is a shortened week thanks to the Easter holiday, it has already been filled with action – and we can expect plenty more as the week goes on.
We had hoped that this week’s joint testimony to the House of Financial Services Committee by the Fed Chair, Jay Powell, and US Treasury Secretary and former Fed Chair, Janet Yellen, would help equity markets, but it turned out to be a complete anti-climax as they both simply repeated their recent comments that the economic recovery is in its infancy and as such, monetary and fiscal support will remain firmly in place.
Global equity markets have, by and large, traded sideways so far this week ahead of monetary policy meetings at the Fed, BoE and BoJ.
Progress with the $1.9tr US fiscal package coupled with better-than-expected Chinese trade data has helped push equity markets higher so far this week.
From an equity market standpoint, over recent years the annual Budget Statement has become a damp squib as speeches have become more and more filled with partisan rhetoric and jokes at the expense of the party in opposition: entertaining to watch, but light on meaningful actions or surprises.
Although it has been a quiet week so far for economic data, it has been a volatile couple of days for global equity markets.
Economic data releases have been light so far this week given a number of markets have been closed (for example, the US was closed on Monday for President’s Day, while a number of east Asian markets have been closed for the Lunar New Year).
Global equity markets continue to move higher given the potential reflation of the global economy – no doubt helped by the $1.9tr US fiscal stimulus package that is currently working its way through Congress, coupled with the better-than-expected company result session and the rapid rollout of coronavirus vaccines.
Global equity markets have renewed their upward momentum this week after last week’s social media frenzy-induced volatility dissipated and allowed markets to focus again on Joe Biden’s fiscal stimulus plans and the global economic recovery.
