What has happened
Equities rose yesterday with the MSCI World hitting its all time high. There was no strong style focus for the day with European travel shares rising on increased holiday optimism but also technology outperforming.
Latest on the pandemic
Today President Biden is expected to update CDC guidance on vaccinated individuals, specifically whether they need to wear masks outdoors. This also comes as expectations build that the US will share its AstraZeneca stockpiles with other nations, with a particular focus on India. In Europe the tone was cautiously optimistic with European leaders also unveiling differentiated travel rules between vaccinated and non-vaccinated individuals. France has indicated that it is looking ahead to an easing of restrictions as cases fall from their peaks earlier in the year. Turkey, which has been hard hit in recent weeks, has moved into a fresh lockdown from Thursday which serves as a reminder of the case level variances within Europe as well as the rest of the world.
US Earnings
US earnings continue apace with Microsoft, Alphabet and Visa all reporting later today. Yesterday saw the release of Tesla’s latest figures which showed a record quarter with an earnings per share of $0.93. Tesla made headlines earlier this year when it revealed it had stockpiled Bitcoin and would enable transactions in the cryptocurrency for certain products. Over the first quarter Tesla sold around 10% of its Bitcoin position and in doing so booked a $101 million gain, representing around $0.25 of that $0.93 per share earnings. Despite these earnings, Tesla shares actually declined in after-market trading due to concerns about forward looking guidance for the electric vehicle manufacturer.
What do We Think?
After a more volatile week there was a more constructive tone in markets, helped by the news flow from the EU around accepting vaccinated travellers worldwide. Recently there has been an increased focus on the third wave which has depressed the valuation of reopening sectors so a relief rally was welcomed by travel equities in particular. Tomorrow’s Federal Reserve meeting will be the true test of risk appetite, however. With the US 10 year bond yield remaining below 1.6% the near term pressure on the Fed for ‘action’ has receded however policy error remains an ever present risk and, as the last week proved, investors are sufficiently skittish to reassess their bullishness based on a few headlines.
| Index | 1 Day | 1 Week | 1 Month | YTD | |
| TR | TR | TR | TR | ||
| MSCI AC World GBP | 0.1% | 1.2% | 4.4% | 8.1% | |
| MSCI UK All Cap GBP | 0.6% | -0.3% | 4.0% | 10.1% | |
| MSCI USA GBP | 0.0% | 1.5% | 5.1% | 9.7% | |
| MSCI EMU GBP | 0.2% | 1.2% | 5.8% | 9.2% | |
| MSCI AC Asia ex Japan GBP | 0.3% | 1.7% | 2.9% | 4.4% | |
| MSCI Japan GBP | 0.0% | -1.2% | -1.4% | 0.7% | |
| MSCI Emerging Markets GBP | 0.3% | 1.6% | 3.5% | 4.1% | |
| MSCI AC World IT GBP | 0.6% | 2.0% | 7.4% | 8.1% | |
| MSCI AC World Healthcare GBP | -0.4% | 2.0% | 4.6% | 4.3% | |
| Barclays Sterling Gilts GBP | 0.0% | 0.1% | 0.1% | -6.2% | |
| Barclays Sterling Corps GBP | 0.0% | 0.1% | 0.5% | -3.5% | |
| WTI Oil GBP | -0.6% | -1.6% | 0.9% | 25.4% | |
| Dollar per Sterling | 0.2% | -0.6% | 0.8% | 1.7% | |
| Euro per Sterling | 0.2% | -1.0% | -1.6% | 2.8% | |
| MSCI PIMFA Income | 0.2% | 0.3% | 2.6% | 4.5% | |
| MSCI PIMFA Balanced | 0.1% | 0.4% | 2.9% | 5.4% | |
| MSCI PIMFA Growth | 0.1% | 0.6% | 3.5% | 7.0% | |
Source: Bloomberg as at 27/04/2021. TR denotes Net Total Return
