Economic data and earnings helped stocks move higher last week as major indexes notched their fourth week of gains in a row. Some of the major US banks kicked off earnings seasons last week, as Goldman Sachs, Wells Fargo, and JP Morgan all beat market expectations for Q1. Whilst the initial price reaction was mixed, it has set a positive tone for the reporting season. The likes of Netflix, Intel, and SAP all report this week.
In terms of economic data, US retail sales surged 9.8% during March which pushes sales higher than they were pre pandemic. In terms of a monthly gain, it is only surpassed by May 2020 which of course was coming on the back of a record decline. There is a consensus that the latest round of stimulus to US households is a direct trigger for the retail sales numbers, and therefore the MoM growth could decline back to a more ‘normal’ level pretty quickly.
Inflation fears continue to linger in the US, as the consumer price index (CPI) rose 0.6% in March, which equates to a 12 month rate of 2.6%. However, policymakers continue to point towards the low base and strong rally in energy prices in assuaging short term data concerns. Weekly jobless claims were at 576,000 which was well below expectations. Conversely, consumer sentiment missed consensus forecasts but did reach its best level since the pandemic broke out. US treasury yields moved lower as stronger demand from overseas investors for new issuance outweighed any concerns about inflation and the knock-on prospects of higher interest rates.
Vaccine news was mixed from the US, as the J&J vaccine distribution was ‘paused’ following blood clot fears. However, there was positive news in terms of supplies from Pfizer and efficacy from Moderna which swung sentiment more positively towards the end of the week. Within Europe, the U.K is beginning to ease lockdown restrictions, whilst in Germany Angela Merkel is pushing for new laws to allow restrictions to be reimposed by federal authorities. CLICK HERE