Weekly Market Wrap 29-March to 01-April 2021

Marius Paun | London, UK | Senior dealer | Thursday 01st April 2021

The US President Presents His $2.25 Trillion Infrastructure Plan

We saw quite a selloff last week in the US stock markets with some wild moves, especially on Friday. It appears that Archegos Capital was behind the massive selling which affected many Chinese Big Tech and Viacom. The family office fund which hardly does any reporting was forced to close $15-$20 billion worth of positions that were leveraged to $80 billion making it the largest liquidation in years. It raised some serious question about oversight/regulation.

The US President Joe Biden unveiled his $2.25 trillion infrastructure plan which includes $620 billion for transportation, $580 billion for manufacturing and R&D, $400 billion to improve care for the elderly. To pay for all that the US corporate tax will go up to 28% from 21%. Tax increases will pay for the plan over the next 15 years.

Meanwhile, we heard from the new member of the Fed Christopher Waller who joined in December and said that move in yields is a sign the economy is improving. He spoke about the Fed independence and not financing deficits adding ‘we’re not here to pick winners and losers. He also said ‘we have no role in climate change.

China reported a new lockdown measure in Ruili City in the west of Yunan province after a raft of new coronavirus cases. Residents have been told to stay at home, ‘vehicles and people are prohibited from leaving the city’. On the other hand, China March PMI surprised on the upside, when Manufacturing came in at 51.9 vs 51.2 expected and Services 56.3 vs 52 expected.

European Central Bank President Cristine Lagarde reiterated her intentions to give sufficient notice to the market participants before unwinding the stimulus. Another ECB member Vasiliauskas added that there is no need to change the current size of PEPP purchases and that too much stimulus is less risky than too little. We’ve heard that one before?…

The UK retailers cut prices yet again to counter lockdown. At the same time, UK employers have turned a lot more confident about hiring, making the damage to the economy much less than many initially feared. However, the FTSE100 is slightly down for the week trading around 6750 on Thursday afternoon.

The US Oil is on the back foot at $60.5 per barrel as the Suez Canal reopened after being blocked by the Ever Given ship. The OPEC+ meeting is underway and it is rumoured the members are discussing the option of rolling over and implementing a gradual oil output increase.

Gold prices dropped to a low of $1677 earlier in the week but have since rebounded back above the $1700 mark to trade at $1726 currently.

After the previous week’s pullback to nearly 50,000, Bitcoin is now back on the advance, rallying to just shy of 59,000 level/hurdle.