Equities

Equity markets around the globe struggled to make headway, in the face of a resurgence of Covid-19 outbreaks. US markets were upset by President Biden’s plans to double the capital gains tax rate. European markets slipped as the pandemic situation worsened in some areas, overshadowing strong corporate earnings. Japan was held back by a return to a state of emergency, in response to surging infection rates. China’s CSI 300 index was boosted by new regulation to curb the expansion of fintech firms.

Bonds

Government bond markets had a better week, although the German Bund failed to respond to the ECB’s remarks about its bond buying programme. Credit markets were slightly firmer, although the high yield end was hit by fears that post-pandemic reopening might be delayed. Returns for hard currency emerging market debt were flat last week, a touch behind global fixed income.

Currencies

The dollar was weaker across the board, in anticipation of no short-term change to monetary policy. The euro was stronger against all majors, as eurozone manufacturing PMIs hit highs not seen since records began in 1997 and the ECB promised continuing support.

Commodities

A year after prices plunged to negative territory, oil was hit by proposals to make OPEC subject to US anti-trust law, putting future efforts to control the oil price in doubt.

Responsible investing

President Biden committed to cutting greenhouse gas emissions by 50% (from 2005 levels) by 2030. Major economies such as the eurozone, China and Japan also increased their commitments to tackling climate change.