Weekly Market Insight

Latest Economic & Market Update 18th February 2021

18th February 2021

Good afternoon, it is February 18th 2021 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Rising bond yields causing equity market jitters
  • Amsterdam Euronext receiving Special Purchase Acquisition Companies (SPACs) IPOs

US equity markets retreated Wednesday, the second day in a row as US Treasuries yields reach highest yield levels in a year. The tech focus Nasdaq Composite closed 0.6% lower on Wednesday while the S&P 500 was flat for the day. 10 year US Treasury yield hit 1.33% on Wednesday and equity selling has continued into Thursday’s trading. The increase in yields make equities a relatively less attractive investment and investors reallocate their money into the higher yielding debt securities. Inflation fears are the driving factor behind the rising bond yields. If inflation rises, the value of the fixed coupon and principal amounts will be eroded. Brent crude oil rose by 1.6% on Wednesday, trading at $64.34 a barrel. (Source: FT)

Special Purchase Acquisition Companies also known as SPACs, a recently popular US investment trend, are approaching European markets with Amsterdam set to become the European trading centre, according to Credit Suisse and Goldman Sachs. A special purpose acquisition company is a company with no commercial operations that is formed strictly to raise capital through an IPO to buy another company. Also known as “blank check companies”, a SPAC has two years to complete an acquisition or else it must return the funds to investors. In 2020 alone, 244 SPACs have launched in the US raising a total of $78.2 billion. In Europe, only three SPACs were launched last year and raised $495 million. However ESG Core Investments raised $250 million on Amsterdam’s Euronext exchange last Friday and is expected to be a recurring investment trend. (Source: FT)

Best & Worst Performers of Large Cap US Stocks on Wednesday
Click image to enlarge

Global Market Update
(as at close of markets 17/02/2021)