Global Markets Ride On Hope

In the last few weeks, the US and European benchmark stock indices were seen setting record highs against the backdrop of data announcements indicating improved worldwide manufacturing data in decades and a drop in bond yields that lifted big technology shares 

The global markets remained firm during the fortnight and a majority of European indices remained closed on April 2 and some even on April 5, 2021 on the occasion of Good Friday and Easter and while the Chinese markets remained shut on Monday i.e. April 5, 2021, observing a national holiday. In the last few weeks, the US and European benchmark stock indices were seen setting record highs against the backdrop of data announcements indicating improved worldwide manufacturing data in decades and a drop in bond yields that lifted big technology shares. Also, accelerated vaccine rollouts and US President Joe Biden’s USD 2.3 trillion plan to support the US economy added to investors’ enthusiasm.

The S & P 500 touched a new high as it surged past the 4,000 mark after the Institute for Supply Management said its index of national factory activity soared to its highest level in more than 37 years in March 2021. During the fortnight, S & P 500 gained by 3.48 per cent while NASDAQ and DJIA rose by 2.45 per cent and 2.43 per cent, respectively. In the European markets, increasing corona virus cases and renewed concerns about rising inflation put a pressure on FTSE 100. The index was up by a mere 0.17 per cent during the fortnight. Germany’s benchmark index DAX remained in the bullish territory during the fortnight, gaining by 3.07 per cent.

DAX is being supported by a sharp rise in Volkswagen’s shares following last month’s revelation that they plan to compete with Tesla in the electric vehicle sector. Additionally, positive uptrend in US’ indices has offered support for DAX to gain. As France extends the partial lockdowns to three more areas of the country, French President Emmanuel Macron has warned that the next few weeks will be tough for all considering the increasing number of cases. In spite of the virus-related fears, French stocks rose modestly on optimistic economic recovery hopes. France’s benchmark index CAC 40 was up by 2.25 per cent during the fortnight.

The Asian markets also surged during the fortnight following positive global cues from their US and European peers. Japanese benchmark index Nikkei and South Korean benchmark index KOSPI surged by 3.14 per cent and 2.81 per cent, respectively. Chinese stocks gained as tourism recovered during the Qingming Festival holidays, indicating the laying of a solid foundation for China’s economic recovery and, in particular, consumption revival in post-pandemic times. Shanghai Composites index gained by 1.19 per cent during the fortnight and Hong Kong’s Hang Seng index was up by mere 0.18 per cent.

The slight increase in Hang Seng was attributed to the technical correction post temporary suspension of its BioNtech vaccinations that had fuelled worries over the pace of Hong Kong’s recovery from the pandemic. The Straits Times Index (STI) that comprises stocks of 30 representative companies listed on the Singapore Exchange jumped by 2.61 per cent in the last few weeks. Canadian index, S & P/TSX Composite index rose by 1.12 per cent during the fortnight whereas Brazil’s BOVESPA index ended the fortnight in the positive territory, gaining by 2.15 per cent. The S & P/ASX 200, which is considered the benchmark for Australian indices, surged by 1.13 per cent.