Wall Street continues to rise
- A combination of President Biden’s $1.9 trillion stimulus package passing, relatively tame inflation figures, and the lowest initial weekly job claims figures since October boosted optimism around the US economic recovery last week.
- That translated into new record highs for some major stock indices.
- The DJ30 led the way, advancing 4.1%. Both value and growth benchmarks advanced, and small cap stocks outperformed during the week.
- A rebound in tech stocks combined with economically sensitive names advancing drove markets higher, as the SPX500 advanced 2.6% and the NASDAQ climbed 3.1%.
Central banks to impact markets this week
- In the week ahead, the Federal Reserve, Bank of Japan, Bank of England, and other central banks are all holding meetings, policy reviews, or providing other updates.
- The Fed’s meeting is widely expected to yield no change in interest rates, but investors will be looking for insight into how the central bank is thinking about recent movements in long-term Treasury yields.
- The Bank of Japan, according to Reuters, is facing down a tough policy review towards the end of the week. Guidance on what the BoJ is willing to tolerate in terms of volatility in long-term bond yields will be one point to watch.
Oil reaches highest levels since 2018
- Oil prices climbed to start last week, reaching their highest levels since October 2018 on Monday.
- However, prices later showed a correction.
- There are several factors at the moment supporting the oil price, such as the weak USD and the general rotation from growth stocks to cyclical.
- Commodities tend to benefit during these times and are often used as an inflation hedge given they are asset-backed and the underlying rises with it.
- Recovering global demand, reduced mobility restrictions, drawdown in inventories and some potential geopolitical tension in the middle east are all factors that boost prices.
- Moreover, OPEC has pledged to keep supply cuts through April.
Bitcoin reaches $60,000 milestone
- Following the passing of the fiscal stimulus package in the US, Bitcoin has rallied last week, and continued to climb throughout the weekend, reaching as high as $61,000 on Saturday.
- Increasing concerns around inflation and rising levels of debt could bode well for the crypto market going forward.
- On the institutional front, a rumour at Oracle has purchased $4 billion worth of Bitcoin was quashed in the company’s earnings call this week.
The Week Ahead
- Retail Sales data in the US (Tuesday)
- Fed quarterly Economic Projection; New Zealand quarterly GDP data (Wednesday)
- Bank of England Monetary Policy Summary and Official Bank Rate (Thursday)
- Bank of Japan Monetary policy statement (Friday)
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.