Market Overview – 15/06/2021

Inflation expectations are still having an impact on market movements albeit this time, in the positive direction. In the US, figures from the Labor Department proved consumer prices, minus food and energy, have risen by 0.7% last month, 30 basis points above expectations. The annual figure for inflation has peaked at a 13-year high of 5%. Nonetheless, US equities climbed 0.4% last week, partly driven by the University of Michigan’s survey that found the annual inflation expectations was beginning to reverse with consensus that prices will climb by only 4%, down from prediction of 4.6% in May.

In the UK, Prime Minister Boris Johnson delayed the complete re-opening of England on 21 June by four weeks. However, these concerns did little in the way of halting the FTSE 100’s rally last week as it rose over 0.9%, reaching its highest level year-to-date. The Bank of England is still closely monitoring the rate of inflation as the UK economy expanded 2.3% in April, the fastest rate seen since July 2020.

Elsewhere, pan-European equities climbed 1.1%, aided by the European Central Bank’s announcement that it will continue its high rate of bond purchases in Q3. China however is seeing its second consecutive week of declines as the nation looks to tackle its rising number of Covid-19 cases.