Market Update

After a turbulent start to the week, global equity markets made a robust recovery today, ultimately closing the week with a slight gain. This serves as a reminder of how capricious short-term market movements can be and underscores the importance of resisting knee-jerk reactions in favor of maintaining a long-term perspective.
Early in the week, equity markets experienced a decline primarily due to geopolitical concerns stemming from coordinated sanctions against several Chinese officials over human rights abuses against Uyghur Muslims. However, it's important to note that sanctions against individuals, while impactful on front-page headlines, generally have minimal influence on equity markets. Indeed, this concern quickly faded into the background when the Federal Reserve announced the removal of dividend and buyback restrictions on US banks. Additionally, President Joe Biden's pledge to double the US vaccine rollout target injected optimism into the markets. A swift vaccine rollout is pivotal for the global economy to reopen and, more importantly, remain open.
Further boosting optimism were slightly better-than-expected UK retail sales figures and a lower reading for core Personal Consumption Expenditures (PCE), which is the Federal Reserve's preferred measure of US inflation. While headline inflation is expected to surge in the coming months due to the pass-through effect of distorted oil prices from last year, the core PCE reading (excluding volatile items like food and energy) underscores that inflation is not spiraling out of control.
Looking ahead to the upcoming week, despite the shortened trading week due to the Good Friday bank holiday, there is a lineup of important economic data releases. The highlight of the week is Friday's (April 2, 2021) release of US employment data, including non-farm payrolls, the unemployment rate, participation rate, and average earnings. Additionally, notable US data releases include consumer confidence on Tuesday (March 30, 2021) and jobless claims on Thursday. Beyond the US, attention will be on Eurozone Consumer Price Index (CPI) inflation, Chinese Purchasing Managers' Index (PMI) figures, and Japanese industrial production data.