Weekly markets recap 15.2.2021

U.S.

American indexes closed higher for the second week and reached record highs again. Positive sentiment was fueled by accelerating rollout of coronavirus vaccines and declining case trends. Communication services stocks outperformed and rising oil prices helped energy stocks to gain.

The core (excluding food and energy) consumer price index (CPI) remained unchanged in January, below consensus estimates of an increase of 0.2%. This had an effect on bond yields, pushing them down for a while but rose again on Friday. Weekly jobless claims fell to 793,000 from 812.000, a revised number from the previous week.

EU

European markets ended higher as well, although we saw some big swings on the indexes during the week. The pan-European STOXX Europe 600 Index gained 1.09%. Major indexes were mixed: Germany’s Xetra DAX Index was roughly flat, France’s CAC 40 added 0.78%, and Italy’s FTSE MIB rose 1.42%. The UK’s FTSE 100 Index advanced 1.55%.

The UK economy contracted 9.9% in 2020, which is the worst performance for 300 years. Output grew in the final quarter due to increases in government expenditures and gross capital formation. The Bank of England’s outlook calls for a sharp economic contraction in the first quarter of 2021 because of continuing lockdown restrictions, followed by a sharp recovery around midyear due to a quick rollout of the national vaccination campaign.

Japan

Japan’s stock markets recorded a second straight week of solid gains. The Nikkei 225 Stock Average advanced 2.6% (740.88 points) and closed at 29,520.07. For the year-to-date period, the widely watched yardstick is ahead 7.56%. The broader equity market benchmarks, the large-cap TOPIX Index and the TOPIX Small Index, also produced weekly gains. The yen was slightly stronger for the week and traded at about JPY 105 versus the U.S. dollar on Friday.

China

Chinese markets rallied ahead of the Lunar New Year holiday. The Shanghai Composite Index rose 4.5% and the large-cap CSI 300 Index gained 5.9% in a holiday-shortened week that ended Wednesday. Most markets across Asia were closed on Friday for the weeklong holiday that kicked off February 12. Hong Kong stocks ended at a three-week high.  In fixed income trading, the yield on China’s sovereign 10-year bond stayed broadly flat for the week, up just one basis point. In currency markets, the renminbi was largely unchanged, closing at 6.46 against the U.S. dollar. China’s stock, bond, and currency markets will reopen February 18.