New York Stock Exchange, trader Americo Brunetti, center, works on the floor. With the Covid-19 vaccination supply crunch story taking a back seat, investors are finding a sense of optimism around the improving global economic outlook story. AP
New York Stock Exchange, trader Americo Brunetti, center, works on the floor. With the Covid-19 vaccination supply crunch story taking a back seat, investors are finding a sense of optimism around the improving global economic outlook story. AP
New York Stock Exchange, trader Americo Brunetti, center, works on the floor. With the Covid-19 vaccination supply crunch story taking a back seat, investors are finding a sense of optimism around the improving global economic outlook story. AP
New York Stock Exchange, trader Americo Brunetti, center, works on the floor. With the Covid-19 vaccination supply crunch story taking a back seat, investors are finding a sense of optimism around the

Improving global economic outlook sparks market optimism


Gaurav Kashyap
  • English
  • Arabic

Currencies and stock markets have moved higher since my last column, with the US dollar weakening. After hitting two-month highs in February, the US Dollar Index has since cooled off as a risk-on approach has boosted money markets.

With the Covid-19 vaccination supply crunch story taking a back seat, investors are finding a sense of optimism around the improving global economic outlook story.

This coming Friday will be the first test of the year, when several leading economies, including the US, eurozone, UK and Japan, release their flash Purchasing Managers' Index data for the month of February. The PMI is a key early indicator in the measure of activity in both the services and manufacturing sectors.

While the US is expected to show a slight slowdown in both manufacturing and services PMI, the figure will still be deep in expansionary territory (a reading above 50 indicates a pick up in economic activity). Both categories are expected to outperform in the eurozone.

Along with the week-ending PMI data, I will also be watching for US retail sales due out later today, with month-on-month sales forecast to show a strong bounce back after a contraction of -0.7 per cent in December.

We also have the US Federal Reserve meeting minutes due late Wednesday, which will give a deeper view into the thinking of the central bank and its views on inflation, in particular. So far, the Fed has maintained a dovish view on price pressures and it will be interesting to see if that outlook changes even slightly.

Keep an eye out for the progress of US President Joe Biden and his government this week, who have yet to gain support from Republicans to deliver on the $1.9 trillion stimulus plan.

While there is no set date on when the bill will pass, Democrats would want it enacted before the next round of emergency jobless benefits comes to an end in a month's time. Much of the stimulus talk is already priced into the markets, and barring an immediate burst of risk on buying, markets should quickly shrug off the news.

Meanwhile, all eyes are on the British pound, which has rallied almost 3 per cent from its early February lows. After smoking through a couple of key resistance levels, it is trading at near three-year highs above $1.39 levels and is on the verge of my $1.40 target given last time.

The pound has benefited from a weaker greenback and markets are grasping the optimism around the vaccine drive in the UK, where more than 15 million people have been inoculated so far.

The pound has benefited from a weaker greenback and markets are grasping the optimism around the vaccine drive in the UK

This milestone will no doubt shift the talk towards an economic reopening of the UK, which has also boosted sterling’s prospects in the short term. While I maintain a bullish bias in the pound for the medium to longer term, it may be too premature in the short term to enter longs at such elevated levels and a correction back towards $1.37 would prove to yield more value.

And finally, earnings week continues in the US with a number of companies expected to announce their results.

Walmart will announce its earnings on Thursday before the market opens. Sales are expected to bounce back amid the heightened holiday demand in the fourth quarter of 2020 and investors will be on the lookout for more details on the retail giant's new subscription service Walmart Plus.

The world’s largest retailer is the first in the sector to announce fourth-quarter earnings this season and is expected to set the tone for a retail segment that has largely struggled amid the pandemic.

Canadian commerce giant Shopify will announce its earnings late Wednesday. The stock has rallied hard in 2021 and is up around 30 per cent, but it could see some profit-taking after earnings are announced. Chinese tech giant Baidu will also announce its results after markets close on Wednesday, while high growth digital media player Roku will release its results after the close of trading on Thursday.

Gaurav Kashyap is a market strategist at Equiti Global Markets. The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti

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The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.

Read part three: the age of the electric vehicle begins

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The Cairo Statement

 1: Commit to countering all types of terrorism and extremism in all their manifestations

2: Denounce violence and the rhetoric of hatred

3: Adhere to the full compliance with the Riyadh accord of 2014 and the subsequent meeting and executive procedures approved in 2014 by the GCC  

4: Comply with all recommendations of the Summit between the US and Muslim countries held in May 2017 in Saudi Arabia.

5: Refrain from interfering in the internal affairs of countries and of supporting rogue entities.

6: Carry out the responsibility of all the countries with the international community to counter all manifestations of extremism and terrorism that threaten international peace and security

ENGLAND SQUAD

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Sudden change in behaviour or displays higher levels of stress or anxiety

Shows signs of depression or isolation

Ability to sleep well diminishes

Academic performance begins to deteriorate

Changes in eating habits

Struggles to concentrate

Refuses to go to school

Behaviour changes and is aggressive towards siblings

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