By William Gray,
Investment Assistant, Astra Group
At the end last week the Nasdaq was up, supported by a rise in Facebook which rose after CEO Zuckerberg said that Apple’s policy changes on ad sales would help boost Facebook into a “stronger position”. The Dow finished the week down as a result of declining banking shares due to the Fed’s decision to let the leverage exemption rule expire (also known as the supplementary leverage ratio). This would mean that banks would have to revert back to holding increased layers of cash designed to act as an extra cushion against the U.S. Treasuries and central bank deposits. Treasury yields continued to drive concern, however did eventually settle; the dollar remained steady and gold gained momentum ending the week at $1742. Oil also bounced back from its sharp selloff which cut around 7% off of prices which stemmed from a surge in covid-19 cases across Europe thereby stunting the expectations of a near term recovery of the demand for crude oil. The sharp decline in oil prices was seen by many as ‘oversold’, and the market still remains bullish on the growing demand for the commodity coming out of the pandemic. It is also likely that production cuts will be on the cards for longer than anticipated, which consequently could see the rally in oil price continue. So far, oil price momentum is only slowing; the market still sees oil continuing its upward trend.
Key events which will mark the coming week include existing home sales for February and the National Activity Index for February, alongside fourth quarter U.S. GDP (expected at 4%) numbers and initial jobless claims. Consumer spending figures are expected to show a 0.7% decrease after a 2.4% increase the month previous. Fed Ex topped the leader boards for largest intraday S&P500 gain last Friday at a 5.62% increase, so investors will likely be eyeing other logistics and postal service companies which still have the legs as the pandemic continues across most of the world.