Please find the latest edition of Weekly Digest attached.
Covid-19 concerns and US tax policy offset earnings and economic strength. Global equities fell 0.2% in $ (MSCI World). The US absorbed the Biden administration’s announcement that capital gains tax increases were part of the agenda for funding the renewing of America expenditure programme, which hit the headlines and US equity markets on Wednesday.
Looking at sectors, performance had a defensive bias. Technology underperformed globally fractionally, with the NYSE FAANG+ index (the FAANGS plus Netflix) falling by almost 2% relative to the World Index. Financials also marginally underperformed, alongside mining. The VIX volatility index nudged upwards to 17.3 from 16.3, having traded below 20 since the end of March, however, currency and interest rate volatility nudged lower. All volatility measures are showing positive (declining) trends.
Whilst oil and gas were fairly flat, agricultural products continue to boom. We wish to continue to allocate to both the energy transition and to commodities that we believe will help protect clients from inflation in the coming years (e.g. copper and gold):
- Vaccination rate: 47 countries have delivered vaccinations numbering more than 10% of their population
- Seven day average of global new cases has ticked up for the fourth week to 800k, from 736k making a new record
- Daily mortality now following infection trends – 12.3k/day = higher than in early January, but still below peak (last week 12k/day)
- Johnson & Johnson vaccine re-approved in US
- US acting to help India – sending excess AstraZeneca vaccine doses
The Week Ahead
Company earnings seasons hits peak rate with 180 of the 500 US S&P companies reporting, as an example. So far, earnings continue to beat expectations. So far, 123 S&P 500 constituents have reported Q1 earnings. 85% have beaten on the earnings line and 77% have beaten on the revenue line. In aggregate, earnings have been 23% above the consensus forecast. Companies of particular interest to us due to report include Roper Technologies, UBS, Microsoft, Visa, Alphabet, Renishaw, Assa Abloy, Apple, Facebook, Total, Glencore, Schroders, St, James’s Place, Thermo Fisher Scientific, NatWest, Royal Dutch Shell, BP, Unilever, Hexagon, Amazon, Astrazeneca, Barclays and Illinois Tool Works.