Market Update

Despite better-than-expected economic data this week, equity markets failed to gain traction, facing headwinds from a resurgence in coronavirus cases, primarily in India, and reports of Joe Biden considering a significant increase in the capital gains tax rate to 39.6%.
While it's possible to argue that this move by the US President is likely just an opening proposal, as Congress is unlikely to swiftly approve such a substantial overnight hike in capital gains tax, it underscores the prevailing political trend towards higher taxes, both on a personal and business level.
On a positive note, economic data indicates that the global economic recovery is steadily progressing.
In the UK, April's PMI readings posted impressive gains. The manufacturing index rose to 60.7 from 58.9 in March, while the services index increased to 60.1 from 56.3. Considering that lockdown restrictions were not eased until April 12, 2021, these data readings may underestimate the true extent of the UK's economic rebound.
Europe saw a similar positive trend. Manufacturing expanded to 63.3, its fastest pace of growth since records began in June 1997. The services index also improved, rising to 50.3 from 49.6. Notably, a reading above 50 indicates expansion, marking a turning point for the Eurozone's economy.
In the US, weekly initial jobless claims dropped by 39,000 to 547,000, marking the lowest figure since the onset of the coronavirus pandemic. Texas and New York played a significant role in this decline, with non-seasonally adjusted claims falling by 23,357 and 17,316, respectively. It's worth noting that both Texas and New York are among the largest US states in terms of GDP and would individually rank among the top 10 largest economies globally, surpassing countries like Canada and Russia.
Looking ahead to the upcoming week, there's a multitude of economic data releases on the horizon, including Q1 GDP figures for the US and Eurozone, the US Personal Consumption Expenditure (PCE) index (the Fed's preferred inflation measure), Eurozone CPI inflation, Chinese PMI data, US durable goods orders, and Japanese industrial production. Additionally, both the Federal Reserve (Fed) and the Bank of Japan (BoJ) have scheduled monetary policy meetings.