Market Review

Global Markets Weekly Update

April 01 2021

Review the performance of global stock and bond markets over the past week, along with relevant insights from T. Rowe Price economists and investment professionals.


S&P 500 crosses 4,000 mark

The major benchmarks closed higher for the holiday-shortened trading week. (Markets were closed Friday in observance of the Good Friday holiday.) The large-cap S&P 500 Index made news on Thursday for crossing the 4,000 threshold for the first time, and the S&P MidCap 400 Index also set a new intraday record. The technology-heavy Nasdaq Composite index led the advance, however, helped by gains in a wide range of semiconductor and hardware stocks, as well as a rally in Facebook shares. The consumer staples and materials sectors lagged within the S&P 500. Relatedly, growth stocks widely outperformed value shares for the first time since January.

Contagion worries supplanted by infrastructure optimism

The week started out on a mixed note, which T. Rowe Price traders attributed in large part to continuing ripple effects from the previous week’s implosion of the hedge fund Archegos Capital Management, which operated as a family investment vehicle. Having suffered steep losses in holdings of U.S. and Chinese media and internet firms, Archegos was forced to liquidate large positions in other widely held stocks through discounted “block trades,” driving share prices lower. In addition, two major global banks that had participated in so-called swap trades with Archegos warned investors that they might suffer significant losses.

Our traders noted that concerns over the episode quickly diminished, however, leading investors to focus once again on the increase in bond yields and hopes for faster economic growth. Sentiment on both fronts appeared to largely be driven by President Joe Biden’s infrastructure plan, which he unveiled on Wednesday. The bill would vastly increase spending on internet and transportation infrastructure, as well as research and development. At USD 2.25 trillion, the cost of the package came in on the lower end of expectations, although Biden said a second package would be revealed in April that focused spending on health care, education, and child-care. Biden’s plan did not include tax increases on upper income individuals, as some had speculated, but it did include raising the top corporate tax rate back to 28% to cover the cost of the bill.

Factories at their busiest in nearly four decades

The week’s economic data appeared largely supportive of markets. On Tuesday, The Conference Board announced that its index of consumer confidence had registered its biggest gain in nearly 18 years in March, while its gauge of consumer expectations had reached its best level since the summer of 2019. Regional manufacturing indexes also surprised strongly on the upside, while the Institute for Supply Management’s gauge of factory activity hit its highest level since December 1983. T. Rowe Price Chief U.S. Economist Alan Levenson notes that a snapback from harsh weather in February was partly at work, however.

Labor market data were a bit murkier, although this also seemed to calm fears for some that the economy was in danger of overheating. Payroll processor ADP’s tally of private-sector job gains in March missed consensus forecasts by a bit when it was released Wednesday. On Thursday, the Labor Department announced that weekly jobless claims had increased to 719,000, from a downwardly revised (and pandemic-era low) of 658,000 the week before. The Labor Department’s monthly payrolls report was scheduled to be released on Friday, after markets had closed for the week.

Bond yields retreat late in the week

The jobless claims data seemed to drive a decline in the yield on the benchmark 10-year U.S. Treasury note at the end of the trading week. (Bond prices and yields move in opposite directions.) Municipal bonds continued to outperform Treasuries for much of the week, as the technical tailwinds of muted supply and strong cash flows remained intact—for the year-to-date period ended March 24, flows into municipal bond funds reached a record high, according to Lipper data. Our traders noted that buying activity became more selective as the week progressed, however.

Our traders also observed month-end buying across all maturities in the investment-grade corporate bond segment. Coupled with a lighter week of primary issuance, the trend contributed to narrowing yield spreads compared with Treasuries, and the new deals that reached the market were met with adequate demand. The high yield market was also stronger, as the projected positive economic impact of the Biden administration’s infrastructure plan seemed to offset the inflation fears that have been weighing on broader risk markets recently. High yield funds reported positive flows.

U.S. Stocks1

Friday’s Close

Week’s Change

% Change YTD





S&P 500




Nasdaq Composite




S&P MidCap 400




Russell 2000




This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.
Source of data: Reuters, obtained through Yahoo! Finance and Bloomberg. Closing data as of 4 p.m. ET. The Dow Jones Industrial Average, the Standard & Poor’s 500 Stock Index of blue chip stocks, the Standard & Poor’s MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments of the U.S. equity markets by market capitalization. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock exchange and the National Market System. Frank Russell Company (Russell) is the source and owner of the Russell index data contained or reflected in these materials and all trademarks and copyrights related thereto. Russell® is a registered trademark of Russell. Russell is not responsible for the formatting or configuration of these materials or for any inaccuracy in T. Rowe Price Associates’ presentation thereof.


European shares rose to near record highs in a shortened trading week on optimism about a speedy economic recovery. Expectations for U.S. infrastructure spending helped alleviated concerns of a longer-than-anticipated lockdown on the Continent. In local currency terms, the pan-European STOXX Europe 600 Index ended 2% higher. France’s CAC 40 Index and Italy’s FTSE MIB made similar gains, while Germany’s Xetra DAX Index rose about 3.0%. The UK’s FTSE 100 Index was little changed.

Core eurozone government bond yields ended higher overall. They rose early in the week with U.S Treasuries, which sold off on expectations of more U.S. fiscal stimulus and U.S. vaccination progress. However, surging coronavirus cases in Europe amid vaccine rollout challenges and widened lockdown measures in some countries, including France, drove demand for core bonds, causing yields to fall midweek onward. They were pushed lower after European Central Bank President Christine Lagarde said the end of the Pandemic Emergency Purchase Programme is “not set in stone.” Peripheral government bond yields largely tracked core markets. UK gilt yields rose primarily due to the sell-off in U.S. Treasuries, the efficient vaccine rollout in the UK, and the easing of restrictions in England.

France imposes third national lockdown; vaccines tensions rise

French President Emmanuel Macron decreed a third nationwide lockdown that will last a month to curb a jump in coronavirus infections across the country. The Irish government said it would lift restrictions at a slower pace than previously planned because its vaccination campaign has been held back by a shortfall in supplies from AstraZeneca. The government had planned a wider reopening of the economy on April 5 but will now postpone most steps until May.

European Union (EU) Internal Market Commissioner Thierry Breton said the bloc would ensure that the AstraZeneca vaccines produced within the EU would stay there until the company fulfilled its delivery commitments. He also said the EU did not need the Russian Sputnik V vaccine because it had capacity to produce enough doses by the end of June to inoculate the population. However, the Kremlin later said that Macron and German leader Angela Merkel held talks with President Vladimir Putin to supply the Sputnik vaccine. Austrian leader Sebastian Kurz said his country is likely to order supplies of the Russian vaccine next week. Germany, France, and other countries continued to limit the use of AstraZeneca’s vaccine, prompting the bloc’s medical regulator to say there is no evidence to support any restrictions.

Eurozone inflation accelerates

Inflation in the 19 countries of the eurozone quickened in March to 1.3% from 0.9% in February on higher energy and non-processed food prices, according to an official flash estimate. The European Central Bank has said there would be a temporary spike in inflation, which will then slow to well below the 2% target in the years ahead.


Mixed week for Japanese equities

Japanese equities began the week positively as investors continued to look for bargains following the sharp market decline early last week. Sentiment was also upbeat ahead of U.S. President Joe Biden’s infrastructure plan announcement on Wednesday. Some disappointing economic results, and news that the weekly number of new coronavirus cases in Japan exceeded 10,000 for the first time in six weeks, saw markets falter midweek before closing Thursday on a rising trend once more. President Biden’s announcement of more than USD 2 trillion in U.S. infrastructure investment saw hopes renewed for a potential stimulus-driven global economic recovery. Japanese markets were also buoyed late by technology stocks, mirroring gains on the tech-heavy Nasdaq index. The benchmark Nikkei 225 Stock Average finished ahead 0.7% for the week through Thursday, while the broader TOPIX closed approximately 1% lower.

Dollar/yen at 12-month high

A spike in U.S. Treasury yields saw the U.S. dollar climb to a one-year high against the yen on Wednesday and, at Thursday’s close, the USD was trading in the high JPY 110 range.

Retail sales and industrial production disappoint 
Official data showed that the total value of retail sales in Japan fell by an annual rate of 1.5% in February, while Japanese unemployment came in at a seasonally adjusted 2.9% in February, unchanged from the January reading. Japanese industrial production was also down by a seasonally adjusted 2.1% in February, month on month, exceeding the anticipated 1.2% decline. This was particularly disappointing given the 4.3% jump recorded in January.


Chinese equities were strong ahead of a long weekend, with sentiment buoyed by the news of an additional tax reduction of RMB 550 billion to consolidate the economic recovery, strong March purchasing manager’s index data, and the better tone of U.S. and global markets. From the previous Friday to Thursday April 1, the CSI 300 and Shanghai Composite each rose by 1.4%. Heavy machinery leader Zoomlion beat consensus earnings by 3%, giving positive sales guidance for all business segments—concrete machinery, aerial platforms, cranes, and agricultural machinery. The company is viewed as a bellwether not only for the construction sector but also for plant and equipment investment generally. In a similar vein, preliminary data from online vehicle platform showed a big surge in March shipments of heavy trucks.

In the bond markets, yields were flat over the week, with the 10-year sovereign bond yielding 3.22%. FTSE Russell confirmed the inclusion of Chinese central government bonds (CGBs) in its WGBI global bond index, with a 36-month phase in from the end of September 2021. With an estimated USD 2.0 trillion of passive funds tracking the index, analysts think there could be substantial potential inflows into CGBs. In currency markets, the renminbi depreciated 0.5% against the U.S. dollar, closing at 6.574.

China is still reporting small numbers of new COVID-19 cases, with 16 on Wednesday, of which 10 were imported and six were local. Many believe that China’s vaccination plan to cover 40% of its citizens by the end of June is ambitious, but, if delivered, it may foster a strong rebound in business and consumer services, including food and entertainment. Although China’s international borders remain shut, analysts expect domestic air traffic to make a good recovery this year.

March PMIs give mixed signals

China’s official PMIs for manufacturing and services published by the National Bureau of Statistics (NBS) were better than expected in March. For example, export orders and new orders improved by 2.4 and 2.1 to 51.2 and 53.6, respectively. The NBS PMIs were welcomed as confirmation of a continuing recovery as the economy enters the second quarter. The Caixin/Markit manufacturing PMI was less upbeat, however, missing the Bloomberg consensus (51.4) while remaining in expansion territory at 50.6. Analysts noted that the Caixin survey gives a higher weight to smaller private sector companies that suffered more during the pandemic.

Overall, the March PMIs point to industrial reflation continuing in the second quarter. This could fuel near-term inflation concerns among Chinese investors, as producer prices have picked up in recent months. This may not concern China's central bank unduly since the spillover to consumer prices from producer prices has been muted historically. Moreover, PPI reflation is positive for corporate profits and a revival in manufacturing investment.

Industrial profits off to a strong start

The NBS reported that profits for larger industrial enterprises in January/February had surged 179% from last year's low pandemic base. To reduce distortions caused by COVID-19, the NBS also reported two-year average profits growth of 31.2%. The NBS reported fewer loss-making companies, higher margins, and strong profit increases from materials, energy, machinery, computers, and electronics. Chinese industry is in a much healthier position than it was one year ago.  

Other Key Markets


Mexican stocks, as measured by the IPC Index, returned about -0.3%. The market was closed for religious holidays on Thursday and Friday.

During the week, the Mexican government released its budgetary guidelines for 2022 and provided an update of this year’s budget. According to T. Rowe Price emerging markets sovereign analyst Aaron Gifford, the government intends to keep a relatively tight fiscal stance over the next two years—which is not unexpected—while using additional revenues stemming from stronger economic activity and higher oil prices to compensate for increased expenditures.

Gifford believes that the government’s macro assumptions are mostly reasonable. For example, gross domestic product (GDP) growth is expected to be 5.3% in 2021 and 3.6% in 2022, levels that many analysts are starting to trend to. Regarding inflation, the consumer price index is projected to increase 3.8% in 2021 and 3.0% in 2022—essentially in line with the central bank’s estimates—while oil prices are set at USD 55 per barrel for the Mexican mix (about USD 60 per barrel for Brent). Debt is seen falling gradually for the next couple of years, from 52.3% of GDP in 2020 to 51.1% in 2022.

While Gifford is comfortable with these forecasts, his greatest concern is whether the government’s one-off revenues last year, which totaled more than 2% of GDP, will be recurring this year. According to the Finance Ministry, the government still has plenty of room to increase tax compliance, for example, and stronger growth and higher oil prices would certainly be beneficial. In any case, if revenues fall short of the government’s expectations, Gifford believes that President Andrés Manuel López Obrador will find ways to compensate for it.


Chilean stocks, as measured by the IPSA Index, returned about 0.5%. During the week, the central bank unanimously decided, as was generally expected, to keep its benchmark lending rate at the technical minimum level of 0.5%.

According to Gifford, the post-meeting statement from policymakers kept the more optimistic tone that they introduced in January amid better-than-expected economic data, the coronavirus vaccine rollout, and inflation and inflation expectations near target. This is despite the near-term negative effects from renewed lockdowns that central bank officials consider will have a smaller impact than before. Policymakers also seem to have shortened the time frame for keeping the benchmark lending rate at the technical minimum level from “most of the two-year policy horizon” to “various quarters.”

Furthermore, central bank officials said that they will keep current unconventional policy measures in place but that eventual modifications to those measures will be announced with sufficient notice. Overall, Gifford considers the statement to be hawkish but with a greater focus on positive domestic developments rather than on increasing external risks. In contrast, central banks in other emerging markets have placed greater emphasis in recent weeks on external risks, such as rising U.S. Treasury yields and a stronger U.S. dollar.

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