Market Overview – 25/05/2021

It was another volatile week for equity markets although losses experienced in the earlier half of the week were for the most part rectified by Friday’s close. US equities had fallen by 2.2% by Wednesday before recovering to finish the week down only -0.3%. Additionally, the FTSE 100 performance graph for the week replicates that of its US counterpart, finishing the week down slightly at -0.4%.

The reason for the rapid swing in performances is likely the ongoing inflationary pressures although both the US Federal Reserve and European Central Bank have stated in the past week that any inflation rises would be transitory.

Further positive news regarding economic recovery were supported by updated Purchasing Managers’ Index (PMI) figures, economic activity indicators, which reached a three year high for Europe. The continent is also seeing much of the region taking progressive steps in the easing of lockdown restrictions, resulting in pan-European equities to finish the week up 0.4%.