Vaccinations provide tailwind for stock markets

In March, good economic indicators reflected confidence that the Corona-related restrictions could soon be left behind as China and the USA continue to achieve success in terms of vaccinations, and gave the stock markets in Europe and the USA a tailwind. Market participants also welcomed the U.S. $1.9 trillion Corona aid package.

As most stock markets, with a few exceptions (above all China, Hong Kong), were able to achieve gains, some of them significant, March developed very pleasing.  The German share index DAX reached a surplus in height of 8.86% and traded above 15,000 points for the first time. The broad European index Stoxx Europe 600 rose (6.08%) and the US index S&P 500 gained 7.17%. Nevertheless, Hong Kong's Hang Seng Index managed to increase only up to 0.48%. The global MSCI World Index advanced 6.01% - all index data in euro terms.

Good economic indicators supported the European and American stock markets. The German ifo Business Climate Index jumped from 92.4 to 96.6 points and the Purchasing Managers' Index for German industry climbed from 60.7 to 66.6 points, even though German industrial production fell -2.5% in March compared to previous month. Both indicators reflect confidence that with the progress of vaccinations in China and the US Corona-related constraints will soon be history. The German Purchasing Managers' Index for services also rose breaking with 50.08 points for the first time after several months the mark of 50 points indicating an expanding economy.

In the US, the unemployment rate fell, consumer confidence grew and the ISM Purchasing Managers' Index for manufacturing reached its highest level in three years. Market participants welcomed the approval by the US Congress of a US$1.9 trillion Corona bailout package, which will be largely distributed to Americans as helicopter money. According to the government of US President Biden, another package of 2 trillion US dollars is to follow, primarily for infrastructure projects. The compensation, the first major tax increase in the USA since 1993, was discussed, with corporate taxes to rise from the current 21% to as much as 28%. The US Federal Reserve raised its growth forecast for 2021 from 4.2% to 6.5%.

Purchasing managers' indices also rose in China especially for services. Compared to previous year China's exports increased 61% in January and February, industrial production rose 35% and retail trade 34%. The Chinese government is targeting economic growth of 6% for 2021. At the same time, the OECD also raised its growth forecast for the global economy from 4% to 5.6%.

Inflation also accelerated as the economy gained momentum. In the euro area inflation rose from 0.9% to 1.3% compared to previous year, but this was mainly due to rising energy and food prices, as the core rate (excluding energy and food) fell from 1.1% to 0.9%. In the USA, the development was similar: the inflation rate rose by 30 basis points to 1.7%, while the core rate fell 10 basis points to 1.3%. Central bank of the euro area and the USA raised their inflation expectations for the full year to 1.5% and 2.4%, respectively. The US bond market came under pressure in view of these developments. Yield on 10-year US government bonds rose from 1.40% to 1.74%. Their German counterparts, on the other hand, yielded -0.29%, three basis points lower.

Opposing fears influenced the prices of oil and gold. Oil fell slightly from $66 to $64/barrel caused by concerns that new lockdown decisions would hurt demand. Meanwhile, gold fell further from US$1,727 to US$1,705/troz amid rising interest rates and the improving economy.




Note: All information published is for your information only and does not constitute investment advice or other recommendation. Long-term experience and awards do not guarantee investment success. Securities are subject to market-related price fluctuations which may not be compensated for by the active management of the asset manager or investment advisor. This information cannot replace a consultation. All information has been provided with care and to the best of our knowledge at the time of preparation. Despite all due care, the data may have changed in the meantime. Further information on opportunities and risks can be found on the website The sales prospectus and further information are available free of charge in German from DJE Investment S.A. or at The fund management company is DJE Investment S.A. DJE Kapital AG is the distribution agent.