Market Update

Global equity markets shrugged off Europe's recent lockdown measures, instead concentrating on the rapid vaccine distribution in the US and the resulting economic reopening, which augurs well for worldwide economic growth and equity markets.
This resurgence in economic activity became unmistakable in Thursday's (April 1, 2021) US Institute for Supply Management (ISM) data. This played a pivotal role in propelling the S&P 500 index above the 4,000 mark for the first time.
The S&P 500 monitors 500 prominent US companies, offering a more comprehensive insight into the state of the US economy compared to its more renowned counterpart, the Dow Jones Index, which comprises just 30 constituents. Furthermore, the Dow Jones is weighted by price, meaning it heavily favors companies with a high per-share price, regardless of their market capitalization.
For instance, UnitedHealth Group, with a share price of $367, carries the largest weight at 7.3% in the Dow Jones Index, while Apple, with a share price of only $123, holds a weight of only 2.44%, making it the 22nd largest weight in the index. However, the market capitalization of Apple far exceeds that of UnitedHealth, standing at over $2 trillion compared to just $347 billion.
In contrast, the S&P 500 employs market capitalization (similar to the FTSE-100 index), which means that larger companies constitute a more substantial percentage of the index, irrespective of their individual share prices. Consequently, as the largest company in the US and globally, Apple carries a weight of 5.70% in the S&P 500, while UnitedHealth ranks 12th and accounts for just 1.02% of the index.
Regarding this week's data, the ISM manufacturing index surged from 60.8 in February to 64.7 in March, marking its highest reading since the economic recovery under Ronald Reagan from the early 1980s recession. Additionally, the employment component of the index climbed from 54.4 to 59.6. Since the threshold of 50 separates expansion from contraction, these readings not only indicate ongoing recovery in the US economy but, more crucially, a quickening pace of recovery.
Adding to the optimism surrounding the post-coronavirus economic outlook, President Joe Biden unveiled plans to invest over $2 trillion in US infrastructure. However, it's essential to bear in mind that infrastructure projects cannot be executed at the flip of a switch, so their positive impact is unlikely to materialize for several years.
Looking ahead to the upcoming week, we can anticipate further gains in global equities, thanks in part to Friday's (April 2, 2021) US employment data, which was quite impressive. Since most equity markets were closed, they were unable to react to this astounding release, revealing that non-farm payrolls surged by 916,000 in March, with February's employment gains revised upward by 89,000 to a total of 468,000.
Our primary focus this week will center on the minutes from the most recent Federal Reserve monetary policy meeting held on March 17, 2021, especially in the context of the ongoing inflation debate.
In terms of economic data, the US will provide ISM services data, weekly jobless claims figures, and factory orders. Elsewhere, we will have Eurozone unemployment data, Chinese Purchasing Managers' Index (PMI), and Chinese Consumer Price Index (CPI) inflation figures.