News & Updates

Global equities were stronger across the board last week. Improving sentiment around vaccination programmes, together with the positive developments in Italian politics, were the focus in Europe, while in the United States, stimulus hopes boosted markets.

Equity valuations have been top of mind after major stock indexes have scaled new highs. Last week’s volatile market moves as a result of technical deleveraging added fuel to these concerns. BlackRock do not see risk asset valuations as obviously stretched overall, and expect low interest rates – and a vaccine-led restart – to support risk assets over the next six to 12 months.

Last week was certainly an interesting one for markets as the GameStop/Reddit/Melvin saga dominated headlines and let to volatility and deleveraging. It was also a big week for corporate earnings, with a number of US heavyweights reporting.

BlackRock have long flagged the potential for higher inflation in the medium term, and markets have awoken to this prospect amid expectations for large U.S. fiscal stimulus. They don’t see this derailing the risk asset rally in the near term. We expect a muted response of nominal yields to inflation – our new nominal theme.

COVID-19 and the economic impact of prolonged lockdowns continues to be a driver for Europe’s markets. However, many market observers remain positive on economic outlook, particularly in the United States.

The pandemic has accelerated the rewiring of globalization – with a bipolar U.S.-China world order at its center. The Biden administration is taking a sharply different approach to China in trade and climate policy. Yet overall tensions look set to stay elevated amid ongoing economic and technological competition.