FX.co ★ Stock markets end week with losses yet they likely to rebound

At the end of the week, the world equity markets are extending weakness. US stock indexes fell by an average of 0.6% yesterday.

In the New-York session, the NASDAQ Composite index dropped by 0.72%, the Dow lost 0.38%, the S&P 500 index sank by 0.44%. Optimism that previously fueled demand for riskier assets has now noticeably eased due to a surge in the US Treasury yields.

Additionally, investors were disappointed with the labor market data. The number of initial jobless claims in the United States jumped by 13,000 in the week ended February 13th compared to the previous week (from 793,000 claims to 861,000). This report indicates that the US economy is still very weak and its recovery is slower than expected.

European stock indexes also decreased yesterday for the third consecutive trading session after the publication of the earnings reports by a number of large European companies. The STOXX Europe 600 Index declined by 0.8%, the FTSE 100 index lost 1.4%, the DAX slipped by 0.16%, and the CAC dropped by 0.65%.

The decline in European stock markets is largely due to the concern about the acceleration of inflation, which is reflected in the growth of debt market rates and in the statistics of price indices, as well as the drop in oil prices from local highs.

The MSCI Emerging Markets (EM) Index showed the steepest decline in yesterday's trading. It dipped by 1.4%. MSCI's Global Investable Market Index (GIMI) which is designed to take into account variations reflecting conditions across regions, declined by 0.5%.

On Friday, EU member states will publish their Manufacturing and Services PMIs. The US will unveil its Manufacturing PMI for February today.

Notably, the week coming to an end but it has been a rather uneventful week. Given the decline in the new coronavirus case, the acceleration of the vaccination as well as investors' hopes for additional stimulus, a collapse in world markets is unlikely to occur.

Corrections in the last year are slowly being bought out, and the soft monetary policy of the world's central banks does not contribute to the formation of long-term bearish trends. Bonds are slowly being bought out and the soft monetary policy of the central banks does not contribute to the apperance of long-term bearish trends.