fbpx
Title Image

WeekWatch -‘Markets ended Friday recovering from a midweek dip’ July 2021

WeekWatch -‘Markets ended Friday recovering from a midweek dip’ July 2021

Markets ended Friday recovering from a midweek dip, caused by – among other things – a worry that the Delta COVID-19 variant might slow the progress being made on supply chains.

The week started with Chinese authorities ordering the removal of ride-hailing app Didi from mobile app stores in the country over data concerns. Didi, which had recently listed in the US, immediately saw its shares plummet. In recent months, Chinese authorities have signalled a strong will to crack down on fast-growing tech companies. Coming just a few months after Alibaba received a multi-billion dollar fine, unsurprisingly, Chinese tech stocks struggled during the middle of the week.

Further difficulties emerged internationally later in the week, as concerns about the pace of the global recovery from COVID-19 began to emerge. Thursday saw markets fall from Asia, to Europe, to America, as investors, economists and central banks began to take a slightly more pessimistic view on the pace of recovery.

On Wednesday, for example, minutes from the Federal Open Market Committee meeting in June revealed a number of members of the committee divided over the future policy in the US, and a number worried about growing pricing pressure.

On the same day, the Chinese government said it would cut the reserve ratio for banks to keep money flowing around the economy. Some interpreted this as a signal the Chinese Q2 GDP data might not reach market expectations.

The UK also released its economic data for May, which revealed a growth of 0.8%, leaving it still 3.1% below its pre-pandemic peak. This came despite the month seeing more freedom for indoor hospitality in May.

Explaining these GDP figures, Paul Dales, chief UK economist at Capital Economics noted: “The optimistic slant is that it was due to the unusually wet weather. The pessimistic take is that it could be an early sign that materials and labour shortages are restraining output.”

Looking ahead, Dales added: “Of course, the pace of the recovery was always going to slow as the economy climbed back towards its pre-crisis level. But we hadn’t expected it to slow so much so soon. As such, whereas we previously thought that GDP would return to its pre-crisis peak in August, October now looks a better bet.”

On Friday, markets performed somewhat better, recovering some of the ground lost earlier in the week. The STOXX Europe 600, which fell 1.7% on Thursday, recovered 1.3% by the end of the day, meaning it actually finished the week slightly up.

There was a similar story in the UK, where the FTSE 100 Index’s fall on Thursday was followed by a 1.18% gain on Friday. However, this wasn’t enough to entirely make up for prior events, and it ended the week slightly down. US markets followed a similar trend, falling on Thursday, but recovering some of these losses on Friday.

The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

FTSE International Limited (“FTSE”) © FTSE 2021. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

© S&P Dow Jones LLC 2021; all rights reserved

The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.

Members of the St. James’s Place Partnership in the UK represent St. James’s Place Wealth Management plc, which is authorised and regulated by the Financial Conduct Authority.

St. James’s Place Wealth Management plc Registered Office: St. James’s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP, United Kingdom.  Registered in England Number 4113955.

Proud to be supports of...

Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by St. James's Place. Please note that clicking a link will open the external website in a new window or tab.

88/89 Whiting Street
Bury St Edmunds
Suffolk, IP33 1NX
01284 703422
abbeygatewm@sjpp.co.uk

Registered in England and Wales
Company No.06803554

The Partner Practice is an Appointed Representative of and represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/products. The ‘St. James's Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James's Place representatives.