Weekly Market Insight

Latest Economic & Market Update 4th February 2021

04th February 2021

Good afternoon, it is February 4th 2021 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Mario Draghi steps forward as Italian Prime Minister candidate and awaits parliament ratification
  • Equities rise for third consecutive day, “Draghi Effect” and volatility eases

Mario Draghi, former president of the European Central Bank, has accepted a presidential request to lead a new coalition government in Italy. Mr. Draghi, a politically unaffiliated figure, must now negotiate with main political parties to form and lead a government. Italian President Sergio Mattarella had asked Mr. Draghi to step forward following the failed talks between the parties to form a new coalition under Prime Minster Giuseppe Conte. Mr. Conte is now acting in caretaker role following the collapse of the previous coalition. Mr. Draghi was President of the ECB from 2011 and 2019 and stabilized the monetary union during the turbulence of the Eurozone Debt Crisis. (Source: FT)

Global equities continued rising for the third consecutive day this week. Euro Stoxx 600 rose 0.6%, S&P 500 closed 0.1% higher and NASDAQ Composite ended the day flat. There was a clear “Draghi effect” in yesterday’s trading. The Italian FTSE MIB index outpaced global equities, rising yesterday by 2.09%. The 10 year Italian sovereign bond yield tightened by 64 basis points, trading at 0.476% and below its 200 day moving average 0.538%. Bond yields go down as prices go up. The US 10 year treasury rose 3 basis points up to 1.13%. Last week global equities suffered the most since October and the VIX volatility index reached 30, above its long term average of 20. Yesterday the index continued this week’s downward trend, reaching 23. It appears that despite last week’s reddit traders activity and end of month profit taking, investors will continue to flock to the equity markets for returns. (Source: FT, Bloomberg)

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

Global Market Update
(as at close of markets 03/02/2021)

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