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Last Week in the City: Politics can’t derail market optimism

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook for the week ending 26 March 2021.

Tower Bridge at night
Garry white employee

by
Garry White

in Features

26.03.2021

Trade issues took centre stage following the accidental blockage of the Suez Canal by a very large cargo ship and mounting tensions between Washington and Beijing.  

The US persuaded its allies to join them in sanctioning Chinese officials over policy towards the Muslim minority in China. Beijing then took retaliatory action against Western politicians and officials.

There is still no agreement over what kind of travel documentation about the virus will be acceptable to the major world players to get international travel restarted for non-essential travellers.

The FTSE 100 was down 1.5% over the week and the FTSE 250 lost 1.3% over the week by the middle of Friday’s trading session. However, the general tone in global markets was one of optimism in the recovery.

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Central Banks: How do they get us out of the pandemic? In this Charles Stanley Radio podcast, we discuss the role and support of global central banks, as well as the ongoing battle between the Federal Reserve and the markets at large.

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Covid-19

At least 138 countries have now started vaccination programmes against Covid-19, according to Reuters’ data – but Europe’s vaccine crisis continues. Relations between Britain and the EU thawed, with the two saying they will work together to improve ties after weeks of tensions over vaccine supplies. In a joint statement, they said they wanted to "create a win-win situation and expand vaccine supply for all". This followed European Commission proposals for tougher export controls on vaccines, amid concerns over supplies of the Oxford-AstraZeneca inoculation.

The European Union has suffered significantly from the spread of Covid-19. We look at how its problems securing vaccines will prolong its economic crisis in this week's article, The pandemic takes a large toll on Europe.

Shares in airlines such as easyJet and Ryanair fell after Britons were warned by government ministers not to book summer holidays abroad, as Covid-19 cases in parts of Europe continued to rise.

Investors often ask if the countries borrowing so much money to offset the cost of lockdowns can afford it. So far, the answer has been positive. We look at how they do it in this week's article, Managing the pandemic debts.

Economics

UK inflation slowed to 0.4% in February from 0.7% the month before, according to the Office for National Statistics. City economists had expected a slight uptick to 0.8%.

UK retail sales rose 2.1% in February staging a partial recovery from January’s large fall. Sales were still down by 3.7% year-on-year, before the first pandemic lockdowns were introduced.

US weekly jobless claims fell to a one-year low, as the US recovery powered ahead. Powered by continuing Fed support and a massive $1.9 trillion stimulus from Joe Biden’s administration – and an expected massive stimulus package focusing on green energy.

In this Charles Stanley Radio podcast, we discuss the Green Revolution – what is it and why it matters to investors? Listen here.

The Federal Reserve said it will end restrictions on bank dividends and buybacks for most US institutions on 30 June, if they pass the current round of stress tests.

Geopolitics

Britain imposed sanctions on China for human rights abuses in the western region of Xinjiang – and Beijing responded by sanctioning organisations and individuals in the UK for what it called “lies and disinformation”. It has caused a backlash against western companies. Burberry has lost a Chinese brand ambassador – and designs removed from a popular video game. Nike, H&M and Adidas also came under attack on Chinese social media.

Markets believe the Covid-19 recovery is intact, despite global tensions over trade and human rights continuing to escalate. We look at the clouds building around globalisation in this week's article, Trade tensions no problem for markets.

Economic nationalism grabbed the headlines once more after Intel's new chief executive, Pat Gelsinger, said it was not "palatable" that so many computer chips were made in Asia. The company plans to widen its chipmaking ability in the US and become a contractor making other companies’ chips. Garry White looks at the battle between the US and China over cutting-edge technologies in the article, China plans to pull further ahead of the US in 5G.

Technology

The Trades Union Congress (TUC) warned about what said were “huge gaps” in UK employment law over the use of artificial intelligence at work. The TUC said workers could be “hired and fired by algorithm”, and new legal protections were needed. Garry White looks at the way technology will shape the way we live in the future.

Quarterly sales at Chinese tech giant Tencent jumped by more than a quarter, boosted by the success of its online gaming business.

China's biggest auto manufacturer Geely announced the launch of a premium electric car brand to rival Tesla. Elon Musk’s electric vehicle group has already built a ‘gigafactory’ in the country.

Energy

Fears that it could take weeks to dislodge a giant container ship blocking the Suez Canal caused oil prices to jump on Friday, although they finished the week trading lower. The Japanese owned ship Ever Given has stopped £7bn of goods each day moving through the Suez Canal, including crude and refined products, according to shipping data from Lloyd's List.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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