Market Update

Monthly Market Roundup February 2021

Monthly Market Roundup February 2021
Vaccine rollout provided initial boost to equity markets, but prospects of higher inflation caused market jitters
Strong month for commodities as metals and oil prices advance
Political risk in Italy fades as Mario Draghi appointed prime minister

Global equity markets initially benefitted from the successful rollout of Covid-19 vaccinations. The speed at which people are being inoculated (particularly in the US and the UK) could potentially allow for various economies to shake off the shackles of lockdown restrictions and speed up recovery. However, increased government spending to combat the economic fallout of the pandemic has led to a fear of inflation that unsettled the financial markets by month-end.

After being largely unloved for the best part of a decade, commodities (which typically see prices rise when inflation accelerates) saw a broad upswing during the month. Oil has rebounded to its highest since the depths of the pandemic, while copper and aluminium have also enjoyed a surge in demand. This has resulted in some market participants gearing up for a repeat of the ‘supercycle’ of 2000s, however, others take a more pragmatic view.

Meanwhile, Mario Draghi has been named the new prime minister of Italy, which has boosted the appeal of the country’s government bonds for foreign investors. The former head of the European Central Bank is widely known as a pragmatist, and his appointment provided some reassurance following some of the recent uncertainty. The gap between Italian and German 10-year yields briefly narrowed to its tightest since 2015.

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important information

  • All data is as at 28 February 2021 unless otherwise stated.

    This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.