Bassanese Bites: QE2 – February 08 2021

Global markets

Those of us counting on a deeper correction in equities to add exposure would have been a little disappointed last week as the “retail rebellion” volatility fizzled out and markets instead basked in the glow of ongoing good economic data, corporate earnings, and major ongoing macroeconomic stimulus. The S&P 500 Index surged back 4.6% to a new record high. U.S. bond yields also pushed higher and even the $US is showing signs of strength. Oil surged while gold fell back further.

In the U.S., all the major tech stocks that reported Q4 earnings last week (Alphabet, Amazon, Apple and Facebook) easily beat market expectations, with the reporting season overall again proving better than hoped.  U.S. manufacturing indices suggest a strong recovery is underway, and while monthly payrolls again disappointed for the second month in a row – it’s seen as “old news” reflecting a year-end tightening in COVID-19 restrictions due to the recent surge in cases, which have since eased back.  Indeed, after rising for several weeks to 927k up until early January, U.S. weekly jobless claims have since eased back, dropping to a (still high) 779k last week.


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