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Weekly Market Update: 1st of March 2021

Weekly Market Update: 1st of March 2021

Julius Zondag

Weekly Market Update: 1st of March 2021

Domestic Markets | S&P/ASX200 down 121pts (1.8%)

CBA down $0.95 (1.2%)
FMG up $0.14 (0.6%)

The ASX200 fell 121 points over the course of the week to 6,673 points, as bond yields spiked due to bond holders fearing that interest rates could rise, which caused a rotation out of equities and into bonds.

Global Markets | Dow Jones down 562pts (1.08%)

S&P 500 down 96pts (2.5%)
Nasdaq down 682pts (4.9%)

The Nasdaq led the weekly drop for the American majors, with the tech-heavy nature of the index meaning it was impacted more by the rise in bond yields. In political news, the House of Representatives passed Biden’s $1.9tn stimulus package, which now goes to the Senate to be debated and voted on.

Europe | Euro Stoxx 50 down 77pts (2.1%)
Europe’s major finished the month with its first red week of the month as investors reacted negatively to European bankers speculating that interest rates could rise. The UK’s FTSE 100 also fell as investors took profits as the government announced the path towards easing restrictions.

The Nikkei fell 4% on Friday to finish the month below the significant 30,000-point mark. China’s CSI 300 index had a horror week, shedding 7.7% with data released to suggest that economic recovery slowed down more than expected this month.

Commodities | Gold fell 48.82USD/oz (2.7%)

Silver fell 0.59USD/oz (2.2%)
Copper up 0.03USD/lbs (0.7%)
Iron Ore up 2.5USD/t (1.5%)

Precious Metals | Gold, Silver
Precious metals continued to suffer this week from a rise in bond yields globally, with the increased yields making bonds more attractive than metals which don’t pay holders regular interest payments. Gold fell to $1,733.49, while silver fell less than gold due to silvers industrial uses in an economy which is expected to continue to strengthen.

Oil | WTI Crude, Brent
Brent Crude rose 2.4% in the last month while WTI Crude rose 3.8% in the week as expectations for a reopening economy and larger than expected decrease in US oil inventories boosted the demand side of oil. Oil prices were also boosted by US supply returning slower than expected after Texas’ deep freeze. This week marks a big week for oil prices, as OPEC will need to decide if they reduce supply cuts or not. This decision will have a major impact on oil prices.

Iron Ore
Despite signs that Chinese economic growth is starting to slow down, iron ore prices finished the week at $174/t, coming down from midweek 10-years highs of $175/t. Iron prices were boosted by the vaccine rollout which is expected to lead to strong stimulus-boosted economic recovery. Iron’s price also was also supported by continuing concerns that Brazilian giant, Vale, would take a long time to return to full production.

Although copper prices finished the week only 3 cents higher at $4.10/lb, the increasingly bullish economic outlook caused midweek prices of copper to soar to $4.36. This rise was quickly curbed by the increasing bond yields, with investors selling assets in order to free up cash to add bonds to their portfolios.

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