Dubai: As a crucial quarter winds up this week, analysts opine that investors will be bracing for comparatively higher market flux in the days ahead, before most global markets shut for the long Easter holiday weekend.
Although nearly half a billion vaccine doses administered globally, markets are ending March on a grim note. Analysts evaluate a few of those reasons being renewed China-US tensions, higher bond yields, pandemic resurgence and a tanker stranded in the Suez Canal that possibly deals a blow to world trade.
US and German government bonds have lost between 5 per cent to 6 per cent, and emerging currency debt holders are currently down 6.5 per cent.
Busy week for econ data
On the global economic front, it’s a busy week ahead on the calendar, with 54 statistics in focus in the week ending April 2. In the week prior, 56 stats had also been in focus.
Employment data from the US on Friday will show whether the labour market is getting stronger, which in turn will allow investors to gauge how the world’s largest economy is recovering – whether or not it is in tandem with its peer nations.
In February, the economy created a forecast-beating 379,000 jobs as a decline in new infections and additional pandemic relief boosted hiring. Analysts expect 500,000 jobs were created in March, the largest monthly gain in five months.
More positive data from China
Economic data from China has continued to impress and global trade terms will need to continue improving to support a more sustained global economic recovery. On Tuesday, Japan’s retail sales figures are due out ahead of industrial production figures on Wednesday.
On Thursday, Australia’s retail sales and trade figures for February will be the key drivers, while on Wednesday, business confidence figures for March will influence in a shortened week.
Global stock benchmarks mostly ended higher in the past week, with bond yields less volatile. The closely watched 10-year Treasury bond was up 1.67 per cent Friday, down from 1.75 per cent in the prior week.
Quarter-end trade could be positive
Yields move opposite price, and strategists expect rates to continue to slip in the coming week as investors rebalance their holdings. Some analysts say the quarter-end trade could end up being positive for stocks, especially big cap tech, since rates have stopped moving higher temporarily.
Bonds have staged a much more dramatic move for the quarter with the benchmark 10-year yield rising from 0.93 per cent at the end of last year.
US stocks are higher for the quarter so far. The S&P 500 was up 1.6 per cent for the week and up 5.8 per cent for the quarter to date.
The Dow was up 1.4 per cent for the week, and has an 8 per cent gain for the first quarter so far. The Nasdaq has been the laggard, falling 0.6 per cent for the week and up 1.9 per cent for the quarter.
US-China talks resume
On the geopolitical front, US talks with China have resumed, which will bring chatter from both sides to the forefront from a market perspective.
Relations between China and the rest of the world will therefore need to materially improve to support a more sustained global economic recovery. Analysts monitor the latest spike in tension over Xinjiang cotton.
Tensions between Britain and the EU remain, in spite of the EU’s decision not to ban vaccine exports. Any decision to block the exports of vaccines could lead to a UK response, however, and could also unravel the UK’s vaccination program.
For major global stock markets, it is a shortened week, with European, and US markets closed on Friday.