Wall Street ends Q1 on a positive note
- Despite some perceived market nervousness, Q1’s closing saw continued strong equity markets and better market breadth. This was led by US exceptionalism with a double-driver of more stimulus and vaccine rollout leadership.
- Last week’s ISM report came in at 65, its highest level since 1983.
- Looking into Q2, April is historically a good month for equities, with average S&P returns being favourable, only surpassed by July.
- In Europe, The PMI for the Euro area stood at 62.5 in March, after 57.9 in February. This is its highest level since June 1997.
Biden’s infrastructure plan lifts markets
- President Biden’s $2 trillion-plus infrastructure plan was unveiled last week, with the green energy, housing, broadband and other sectors all set to receive massive funding.
- On Friday, the March jobs report was released. The figures massively beat expectations.
- One other point of interest last week was energy stocks: On Thursday, the SPX500 sector jumped by 2.7%, rescuing it from what would otherwise have been a sharply negative week. Diamondback Energy, Marathon Oil and Devon Energy led the SPX500 on Friday, with gains of 10.5%, 10.4% and 7.6% respectively.
Archegos selloff rocks markets
- Hedge fund Archegos last week collapsed, driving a massive selloff in US markets.
- Archegos is the heir to Tiger Asia Management, a hedge fund created by Bill Hwang and transformed into a “family office” after being condemned by the SEC in 2012. Very opaque, it managed around $10 billion for the family of its founder before the recent setbacks.
- Credit Suisse and Nomura recorded significant losses after the massive unwinding of the positions of Archegos Capital, which led to the urgent sale of some $20 billion dollars of shares concentrated in a few stocks, such as ViacomCBS and Discovery.
- This is the biggest bankruptcy of a hedge fund since that of LTCM in 1998.
Visa crypto adoption boosts markets
- The main news in the crypto market this week was about Visa accepting USDC in their offering.
- This drove prices up, with Bitcoin nearing $60,000 and Ethereum coming close to $2,000.
- USDT also published a report last week, showing that every USDT coin is fully backed by real US dollars.
- Altcoins were also driven higher by the news, with cryptos such as Tron registering double-digit daily gains on several occasions.
The week ahead
- Market holiday in Europe and Asia (today)
- FOMC meeting minutes (Wednesday)
- Fed Chair Powell to participate in a panel discussion a virtual IMF Seminar (Thursday)
Written by a team of experienced financial analysts at eToro.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.