Bassanese Bites: Death and taxes – April 26 2021
Concern over rising COVID cases in hotspots such as Japan, Brazil and India set global equities back last week as did talk of a proposed hike in the U.S. capital gains tax for high-income earners. The end result was a small weekly pullback in stocks after four weekly gains, despite another encouraging drop in U.S. weekly jobless claims and market-beating corporate earnings reports. The more cautious market tone also kept bond yields in check, while the $US eased.
A key focus this week will remain the U.S. earnings reporting season, with tech heavy weights such as Microsoft, Alphabet, Apple and Facebook all set to present updates. While some post-COVID slowing in performance may be evident among these tech names, overall results are likely to remain solid. The first estimate of U.S. Q1 GDP is also released, with a cracking 6.5% annualised result expected (after 4.3% in Q4). The Fed also meets but is likely to reiterate it still sees no need to tighten for a while due to slack remaining in the economy.