Equities

The S&P 500 crossed the 4,000 mark, buoyed by President Biden’s $2.25 trillion infrastructure investment plan, as the US vaccine rollout continued to beat targets. Anticipation of knock-on benefits from this recovery package boosted markets across the globe. Even European markets rose, almost hitting all-time highs, despite the escalation of a third wave of Covid-19.

Bonds

US Treasury bond markets were little changed, despite the stimulus package. Eurozone government bond yields rose, and prices fell, as the ECB president insisted that their bond buying programme was not ‘set in stone’. Month-end buying in investment grade corporate bonds brought a narrowing of spreads over Treasuries. High yield markets were also stronger, with positive inflows. Emerging market debt outperformed the developed markets, remaining flat on the week.

Currencies

Sterling was the stand-out performer among major currencies. The US dollar was slightly weaker, while the euro made ground against both the dollar and the yen. China’s renminbi closed its worst month since the trade war with the US began, hit by plans to withdraw stimulus.

Commodities

Oil prices slipped back on improving supply, as the blockage of the Suez Canal cleared, before gaining later in the week as OPEC proposed only a slow reversal of production cuts. Copper continued its rise, despite a flat week for Industrial Metals.

Responsible investing

The EU would have “no hesitation” in using a carbon border tax adjustment to protect its industries, if trading partners failed to match its climate targets, despite US insistence that this should be seen as the last resort.