Equities

Nearly all global stock markets rose last week. In the US, sentiment improved as a $1.9 trillion fiscal stimulus package was approved, and the latest Consumer Prices Index (CPI) data came in below expectations, helping to ease investors’ fears over inflation. In Europe the Euro Stoxx 50 gained 4.5%, while the FTSE 100 rose 2%. Returns were lower but mostly positive in the Asia Pacific region, but notably the Japanese stock market rose 3%, with strong performances from ‘value’ companies (those that seem to be trading below their intrinsic value). The broader MSCI Emerging Markets index gained 0.7%.

Bonds

Government bond markets remained volatile last week. After a wave of selling on Friday, US Treasury prices ended the week lower (and yields were higher), with the 10-year Treasury yield finishing at 1.62%. European government bonds responded positively to the European Central Bank’s (ECB’s) announcement that it would increase the pace of its bond buying programme. In corporate bond markets, US investment grade and high yield bonds were lower, while European investment grade bonds were flat, and high yield bonds rose slightly.

Currencies

Sterling strengthened against the US dollar, euro and yen last week as UK economic growth data came in above expectations. The dollar fell against sterling and the euro, but gained ground against the yen. The euro was weaker against sterling but rose against the dollar and yen. The Japanese yen was lower against its major counterparts, reaching a 9-month low against the US dollar.

Commodities

The price of Brent Crude oil briefly rose above $70 for the first time in 14 months. Multiple attacks on oil facilities in Saudi Arabia caused the spike, and the oil price ended the week at $69.20. Copper ended the week higher, rising after the US stimulus package was signed into law. The prices of gold and silver also rose over the week.

Responsible investing

Joe Biden’s administration confirmed that it would not enforce regulations from ex-president Trump that dissuaded pension funds from ESG investing. This means that more pension fund managers will be able to integrate ESG analysis in their investment processes without the risk of legal issues.