world markets weekly review

World Markets Weekly Review 24-28/05/2021

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World markets performed well this week with stocks recording solid gains, reflecting the optimism of economic operators, given the possibility that the US Federal Reserve (Fed) will continue with an expansive monetary policy in the United States. Add to the mix upbeat prospects from economies reopening, economic data surprising to the upside and GDP forecasts which continue to be revised upwards by economists. But artificially pumping GDP and debt accumulation sounds like the economy  will always be in need of crutches.

AMERICAS

U.S. equities recorded solid gains for the week with the technology-heavy Nasdaq Composite performing best and the S&P 500 eking out a small gain in May, its fourth consecutive monthly rise.
Weekly jobless claims which fell more than consensus expectations and stronger-than-expected core durable goods orders helped reassure the market. Inflation concerns seemed to cool somewhat, after various Federal Open Market Committee (FOMC) members said higher inflation was only a fleeting phenomenon.

In Latin America, the São Paulo stock exchange index rose on Friday (May 28) by 0.96% and reached a new historical maximum by closing at 125,561 points,  The Ibovespa surpassed the mark hit on January 8, when it ended with 125,076 points. Adding to optimism, first-quarter economic activity surprised positively in the country, and fiscal revenues came in better than expected.

In Mexico, the central bank published the minutes from its May 13 meeting, at which policymakers expressed concerns over inflationary pressures, despite deciding to hold policy rates. “Members emphasised that in a highly uncertain environment such as the current one, a prudent approach is required,” the minutes say.

ASIA/PACIFIC

Japanese stocks registered a gain for the week, despite mixed economic data and news that the government extended the state of emergency till June 20. The unemployment rate worsened in April to 2.8%, up from 2.6% the previous month, while Tokyo consumer price inflation dipped in May.

China’s equities rose strongly, outperforming their peers in the region, on improved A-share market sentiment and positive economic data. Primary home sales jumped 50% from January to April year-over-year, according to the China Reality Research May survey. Meanwhile, April industrial profits surged 57% year-over-year and 106% year-over-year for the first four months of this year.

In Australia, the ASX200 hit a fresh record closing price on Friday of 7,179.5,  representing a weekly gain of 1.2 per cent. The rally helped lift most blue chip stocks with financials and materials proving the standout performers.

AFRICA

In Nigeria, the Central Bank voted unanimously to leave its monetary policy rate unchanged at 11.5%, as widely expected. Growth remains fragile due to persistent inflationary pressures. In Ghana, the Securities and Exchange Commission (SEC) launched this week its maiden Capital Market Master Plan (CMMP) to serve as the blueprint for the development of the capital market in the African country for the next decade.

EUROPE

European stocks advanced on economic data seeming to preserve optimism regarding economic recovery. Eurozone economic confidence in May improved more than expected, the Ifo Business Climate Index for Germany rose to 99.2 in May—its highest level since May 2019.

The formal approval of the €750bn stimulus package by European parliaments and the expectation that first funds should be made available from July, lifted sentiment. France also announced a new €15bn package for companies which had been hit by the Covid-19.

In the UK, Bank of England (BoE) policymaker Gertjan Vlieghe said the central bank could raise interest rates as soon as the first half of next year, if the economy recovers faster than expected.


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