An ‘Ever Green’ Spring & The Most Expensive Traffic Jam In History:
Anyone with access to a news bulletin cannot have missed the mega-container ship Ever Green firmly wedged across the Suez Canal. The ship, spanning some 400m long, was finally re-floated. But, not without having caused perhaps the most expensive traffic jam on record. It held up no less than $9.6bn of goods every day!
March also witnessed a major hacking attack by what Microsoft described as a ‘highly skilled and sophisticated actor.’ Reports currently suggest a hacking group called Hafnium, allegedly backed by the Chinese Government. North Korea once again caused alarm by firing two ballistic missiles. And meanwhile, the virtual currency Bitcoin surged past $60,000. Unsurprisingly then, the month also saw at least one central bank signal its intention to introduce its own cryptocurrency.
Trade tensions continued to rumble between the US and China in Alaska. Exchanges were politely described as ‘angry.’ Thankfully, though, most stock markets took little notice and continued to have a good month. Vaccine roll-outs gathered pace, and hopes rose that lockdowns could soon be eased with economies starting to recover. All in all, Spring began with… well, a spring in its step!
It seems forever ago, but March in the UK began with Rishi Sunak’s Budget. In an unenviable task, the Chancellor laid out the start of his plan for economic recovery from the pandemic. Ever the pragmatist, Sunak warned that while his budget would not be popular, it would be honest. Predictably, the newspapers were not happy with the bill – and the consequent tax rises. With tax thresholds frozen for five years, millions of us will end up paying more tax. ‘Sunak’s five-year tax grab’ chorused the Telegraph headline, while commentators eagerly pointed out that tax levels are now at their highest since the 1960s.
In the broader UK economy there was the usual gloom around job losses. This time, it was the turn of travel agent Tui to announce planned closures of 48 shops. Then the Government turned down Liberty Steel’s request for a £170m bailout, putting 5,000 jobs at imminent risk.
Fear not, though! Our market update also brings news of at least some light at the end of the tunnel now in plain sight! Retail sales rose 2.1% in February, and statistics show that British firms planned fewer job cuts, despite the continuing pandemic. As stated earlier, March was generally a good month for the countries covered in our market update. And the FTSE 100 index of leading shares was no exception. It rose 4%, closing the month at 6,714. The pound was down 1% against the dollar in the month and finished March trading at $1.3804.
Finally, a month has started on a positive note for the European section of our commentary. Reuters reported that February had seen European factories ‘buzzing’ as demand soared. The European Purchasing Managers’ Index rose to a three year high. It reached 57.9 in February, up from 54.8 in January, marking one of the highest figures in the Index’s 20-year history.
Lamborghini in Italy was certainly one of the factories causing a buzz. Despite being shut down for two months, the company saw its most profitable year on record in 2020. The gains came as a result of the company selling more expensive, customised sports cars. Naturally, the greatest demand came from China, set to overtake Germany as its second-biggest market in the not too distant future.
March was a good month for Dutch Prime Minister Mark Rutte, who won a fourth term in the election. But it was not so good for Angela Merkel. The German Chancellor was forced to apologise after the Government backtracked on its planned lockdown over Easter. News of the mood in Germany in our last few market updates seems to have been progressively worsening. So, it’s little surprise that reports are emerging of trust in the German Government now being at a post-war low.
As the world continues to grapple with Covid-19, France, Italy, and Poland imposed new lockdowns. Wrangles over the vaccine roll-out continue to escalate.
…But Europe’s leading stock markets took their cue in March from the factories, not further lockdowns. The German DAX index came in the top place of all the markets covered. It rose 9%. The French stock market wasn’t too far behind, growing 6%.
The month in the US started with confirmation of news the world over was expecting. Zoom – the video conferencing app everyone from grandparents to CEOs has become reliant on over the last year – is forecast more growth this year! 2020 was ‘unprecedented’ for the company, with boss Eric Yuan declaring that working from home is “here to stay.”
There was also good news on the job front in the wider US economy. The hospitality sector was finally able to bring back workers previously made redundant. The economy added 379,000 jobs in February, breaking a two-month run of minimal gains.
In other news, President Biden’s $1.9tn Covid relief package was passed by the Senate, even though every Republican voted against it. It was subsequently passed by Congress a few days later. The Federal Reserve certainly seems to have confidence in it. So far, they are forecasting that the US economy will grow at 6.5% this year, with unemployment down to 4.5% by the year-end. This contrasts with the Fed’s December policy meeting when it was forecasting growth of 4.5% and unemployment at 5%. The Dow Jones index increased 7%. Meanwhile, the more broadly based S&P 500 index increased 4%.
While the rest of the world continues to struggle economically with the pandemic, Chinese Premier Li Keqiang unveiled a growth target of ‘above 6%’ for 2021. To further the globally raised eyebrows, former Minister of Industry and IT, Miao Wei, has stated that China was still too reliant on other countries for ‘core technologies.’ In Wei’s words, China is still ’30 years away from becoming a manufacturing nation of ‘great power.’ (???) With over a third of the world’s output from cars to phones already coming from China, most observers would suggest China may already be a ‘great power.’
Key economic data certainly confirmed China’s bounce back from the pandemic. In the first two months of the year, industrial output was up 35.1% on January and February 2020! Across the East China Sea, the Bank of Japan revealed that it is drawing up plans for a national digital currency –surely a move that other countries will follow.
As far as the Far Eastern stock markets go, March was a mixed bag. The Chinese and Hong Kong markets were down 2% in March, closing the month at 3,442 and 28,366, respectively. The markets in South Korea and Japan both moved cautiously upwards, though. The South Korean Index grew 2%, while Japan’s Nikkei Dow index rose 1%.
March was a relatively quiet month for the Emerging Markets section of our market update. The only real news comes courtesy of Turkey, which has said it will accept ‘unvaccinated Brits with open arms’ in the summer. If they are allowed to fly, those Brits will find that their pound now goes a lot further.
The Turkish lira slid 15% in March following President Erdogan’s shock dismissal of his central bank chief. There was a sharp sell-off in Turkish assets, as the new man struggled to persuade the markets there would be no immediate change of policy. The Turkish stock market duly took note, dropping 10% in March from 1,542 to 1,392.
Elsewhere there were no such alarms for the three other countries reported on in this section. The Russian and Brazilian markets performed well and rose 6% to 3,542 and 116,634, respectively. Meanwhile, the Indian stock market delivered a somewhat more subdued performance but still went in the right direction: it was up 1%.
The section of our market update that you’ve been waiting for has surprising news this month. Back at home, the pandemic has done the unthinkable. Yes – apparently, it has turned us into a nation of binge-watching gaming addicts! Spending on films, music and gaming surged to an all-time high of £9.3bn in 2020, marking the eighth successive year of growth and (no surprise here!) recording the fastest annual growth on record.
The other thing lockdown drove us to, apparently, was to buy a pet. The BBC reported that 3.2m people had bought a pet during lockdown, with young people aged 16-34 making up over half the buyers. The Petfood Manufacturers’ Association says that there are now more than 17m pet-owning households in the UK, which has led to a problem. Don’t let it keep you up at night, but there could be a national shortage of pet food pouches, so it may be time to set another place at the dining table.
Sainsbury’s have sounded the alarm, and Morrison’s have said they might not have “full availability for several months.” Other supermarkets have warned that the problem could last throughout the year. The only saving grace in March was that the nation’s pet food pouches weren’t stuck in the Suez Canal…