The period since we last wrote in mid-May started with a bout of nerves as US housing starts data and the release of the minutes of the Fed’s April meeting worried stocks.
The VIX Index of S&P 500 volatility jumped but then settled back as the market recovered its poise. Overall, the S&P 500 has risen by around 1% and the NASDAQ by rather more as the tech stocks recovered. For a change, the best performance came from the Swiss market, up around 5%, led by Roche Holding, a recovery in the major Swiss banks and better performance from Nestlé. In Japan, the Topix also recovered from recent weakness and the Euro Stoxx 50 gained 2%.
Looking around the major sectors, not much to comment on in the resources area, Oil stocks were little changed despite a further increase in the price of oil (Brent crude back over $70 per barrel) while the major mining companies were down a shade (as were some of the metals prices). Most of the industrials remained firm though Siemens weakened around 6%. The staple goods companies were generally up by 1 / 2% but L’Oreal was a feature, rising around 8% in the wake of the luxury goods companies.
Pharmaceuticals were generally weaker with the exception of Roche mentioned above. Abbot Laboratories sank 7% after reducing their profit forecast in their updated 2021 outlook as demand for COVID testing wanes, and Bayer also fell 7% with disappointment with their risk cover for weedkiller litigation. The consumer discretionary sector was more exciting with particular interest in the motor companies again: Ford Motor jumped 34%, while Toyota and Volkswagen were both up by around 16%. Amazon.com continued a dull year with another dull period while Nike was also down a touch and equally having a dull year.
Media and telecom stocks split between strong performance from Alphabet (Google) and Facebook and not great from the telecoms where Vodafone sank 8% after disappointing earnings. Technology stocks were better, led by a 9% gain for Salesforce.com after a good Q1 earnings report, HP Inc. went the opposite direction after their earnings report, down by 7%. The financial sectors were split between better performance for the banks, particularly the European and Swiss banks, and dull stuff from the insurers and re-insurers.
Stock markets appear to be reasonably well supported at present with economic recovery well on track. But it feels that volatility could easily return any time with a resumption in inflation concerns and renewed weakness in bond markets.