{"id":24912,"date":"2021-04-28T08:00:38","date_gmt":"2021-04-28T07:00:38","guid":{"rendered":"https:\/\/sarasinandpartners.com\/ie\/?p=24912"},"modified":"2021-04-27T17:14:22","modified_gmt":"2021-04-27T16:14:22","slug":"the-week-in-markets-28-april-2021","status":"publish","type":"post","link":"https:\/\/sarasinandpartners.com\/ie\/think\/the-week-in-markets-28-april-2021\/","title":{"rendered":"The week in markets – 28 April 2021"},"content":{"rendered":"

Welcome to your weekly macroeconomic round-up, where we spotlight a few of the most significant events in the last week.<\/h3>\n

US business activity reaches record high<\/strong><\/h3>\n

It\u2019s been another strong week for US economic data, with the flash US composite PMI (which tracks business sentiment across both manufacturing and service sectors) reaching a record high of 62.2 in April, up from 59.7 a month earlier. Service businesses were more optimistic than manufacturers, although both presented record highs at 63.1 and 60.6, respectively.<\/p>\n

Although the outlook for demand remains exceptionally supportive, businesses voiced growing concerns about the ability of supply chains to meet this demand. Underpinning the survey data was an indication of a continued rise in input prices and anecdotal evidence that firms are now seeking to pass on higher prices to customers.<\/p>\n

All this means that the market\u2019s focus on prices and inflation will likely remain for at least the next 6 months, as the Federal Reserve\u2019s assumptions of transitory inflation and commitment to loose monetary policy are tested.<\/p>\n

European economy resilient despite tighter COVID-19 restrictions<\/strong><\/h3>\n

The aggregate eurozone composite PMI rose to a 9-month high in April of 53.7, up from 53.2 a month earlier, and above the 52.8 expected. While the increase only signals a moderate improvement in the economy, when viewed in the context of Europe\u2019s struggle to contain COVID-19 cases, and tightening restrictions, April\u2019s result suggests there\u2019s a degree of momentum building up.<\/p>\n

The increase was primarily driven by a strong manufacturing PMI which hit a new record high of 63.3 up from 62.5 in March. Notably services was also stronger than expected, rising above the level that indicates expanding activity levels (50) for the first time since September. Regionally, France and Germany proved particularly resilient.<\/p>\n

Meanwhile, April\u2019s survey also indicated that firms\u2019 costs are rising at the fastest pace in over 10 years. If persistent, these cost push factors have the potential to feed through into higher consumer prices in coming months, although Europe is generally less at risk of runaway inflation in comparison to the UK and US.<\/p>\n

Biden plans to raise capital gain taxes on wealthiest Americans to 43.3%<\/strong><\/h3>\n

The Biden administration is reportedly considering raising capital gains tax (CGT) for American\u2019s earning more than $1mn a year (0.3% of the US population) to 39.6%. When added to the existing surtax, this would bring the top tax rate to 43.3%. At 39.6%, this proposal is roughly double the current CGT rate and we see it as more of an opening negotiating position for the Biden team which will likely come under scrutiny from some of the more moderate Democratic representatives, such as Joe Manchin.<\/p>\n

Federal Reserve data suggests that the wealthiest US households hold roughly $1tn in unrealized equity capital gains. While selling to crystalize these gains, ahead of a tax rise, may provide a headwind to US equity market returns in the coming months, over a medium to long term horizon research suggests that the effect is largely negligible, as the money is reinvested in the period following the hike.<\/p>\n

Markets <\/strong><\/h3>\n

Global equity markets (measured by the MSCI All Countries World Index) finished the week broadly flat, pausing April\u2019s rally that had left the index up nearly 5%. Regionally, sentiment was divided. Japanese equities saw the biggest losses over the course of the week, with the MSCI Japan finishing down roughly 2% - reflecting the new COVID-19 restrictions announced in response to rising cases.<\/p>\n

The global economic recovery is feeding through into higher commodity prices, particularly for copper, which rose roughly 4% in the week and is nearing all-time highs. A major component in electric vehicles and a staple cyclical commodity, the copper price has now more than doubled since the nadir in March of last year.<\/p>\n

Look out for next week\u2019s update, where we\u2019ll be focusing on Q1 GDP updates and consumer confidence survey data.<\/strong><\/p>\n

\n

All details in this article are provided for information purposes only and should not be misinterpreted as investment advice or taxation advice.<\/p>\n

Where the data in this article comes partially from third party sources the accuracy, completeness or correctness of the information contained in this publication is not guaranteed, and third-party data is provided without any warranties of any kind.\u00a0 Sarasin & Partners LLP shall have no liability in connection with third party data.<\/p>\n

\u00a9 2021 Sarasin & Partners LLP \u2013 all rights reserved.\u00a0 This article can only be distributed or reproduced with permission from Sarasin & Partners LLP. Please contact marketing@sarasin.co.uk.<\/p>\n","protected":false},"excerpt":{"rendered":"

Welcome to your weekly macroeconomic round-up, where we spotlight a few of the most significant events in the last week. US business activity reaches record high It\u2019s been another strong week for US economic data, with the flash US composite PMI (which tracks business sentiment across both manufacturing and service sectors) reaching a record high...<\/p>\n","protected":false},"author":62,"featured_media":10767,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"coauthors":[182],"class_list":["post-24912","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"\nThe week in markets - 28 April 2021 - Sarasin & Partners Ireland<\/title>\n<meta name=\"description\" content=\"Biden plans to raise capital gain taxes on wealthiest Americans to 43.3%.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sarasinandpartners.com\/ie\/think\/the-week-in-markets-28-april-2021\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The week in markets - 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