Monday, 1st March 2021

Weekly Market Update


This past week was volatile for global equities, as investors continued to weigh inflation risks against the potential impact of fiscal stimulus on global economic growth. The S&P 500 fell 2.41%, with growth equities seeing the steepest selloffs as rates rose. In Europe, the Eurostoxx and FTSE 100 both ended the week down 2.33% and 1.92% respectively, despite support from reopening related stocks after the UK announced steps towards ending its coronavirus related restrictions. Chinese investors were saw steep drop-offs as the Shanghai Composite Index declined by 5.1%, while the CSI 300 Index dopped by a larger margin of 7.7%, marking the two indices worst respective weekly performance since October 2018. The dollar rallied as 10-year yields continued to rise, the dollar index ending the week with an increase of 0.06%. Oil prices fell as the dollar rallied, WTI ending the week at $61.50 per barrel and Brent ending at $66.13. Gold ended the week at $1,716.85 per Oz. on Friday, making February its worst month since 2016 with a 6.57% drop across the month.

The week ahead:
Mon: EUR ECB President Lagarde to Speak
Tue: Euro CPI Core Inflation
Wed: US Crude Oil Inventories
Thu: US Fed Chair Powell to Speak
Fri: US Non-farm payroll

Outlook: The equity momentum from 2020 should continue into 2021. Our expectation for more upside is supported by 1) above trend, above consensus global growth, 2) double digit earnings catch up, 3) limited structural imbalances and scarring effects, 4) a predictable, macro guided Federal Reserve, and 5) a near zero policy rate. Compositionally, earnings growth may drive returns more than valuation, as is common in expansionary phases. In terms of Covid expectations, we think that the initial wave of vaccinations will likely bring about a sustained decrease in hospitalizations as elderly populations, which account for 50-60% of hospitalized patients in the US and UK, are vaccinated first. We expect large shares of developed market populations to be vaccinated by mid-2021, with the US approaching 50% in May.

Asset class forecasts*

Current 3m 12m % Δ to 12m
S&P 500 ($) 3714 3900 4300 15.8
STOXX Europe (€) 396 405 430 8.6
MSCIAsia-Pacific Ex-Japan ($) 685 705 755 10.3
TOPIX (¥) 1809 1800 1940 7.3
10-Year Treasury 1.1 1.2 1.5 44.9 bp
10-Year Bund (0.5) (0.5) (0.3) 21.4
10-Year JGB 0 0 0.1 5.3
Euro (€/$) 1.21 1.25 1.28 5.4
Pound (£/$) 1.37 1.42 1.45 5.6
Yen ($/¥) 104.7 103 100 (4.5)
Brent Crude Oil($/bbl) 55.9 60 65 16.3
London Gold ($/troy oz) 1864 2300 2300 23.4
*Source: Goldman Sachs (GS) Global Investment Research and GSAM as of January 2021.

Developed Markets

North America
The Democrat-controlled House moved to pass the expansive U.S. Stimulus Bill over the weekend with support of most Democratic lawmakers. The package includes $1,400 in direct payments to individuals, an extension of federal top-ups to unemployment insurance as well as another $350 billion for state and local governments. The bill also calls for a gradual increase of the minimum wage from $7.25 an hour to $15 an hour across a 5-year period. However, this has been halted by the Senate, stating that it could not be pushed through via budget reconciliation. Across the week, all three major averages posted losses as fears higher interest rates and inflation deepened. The S&P 500 slid 2.45% this week for its second negative week in a row. The Dow fell 1.78% marking its first negative week of the month, while the Nasdaq became largest of the underperformers, closing 4.9% lower on Friday. The drops across the indices came as the Personal Consumption Expenditures (PCE) price index showed subdued inflation across January – rising 0.3% (ahead of expectations of 0.2%). The week’s strong economic signals also seemed to feed inflation worries. Weekly jobless claims hit their lowest level (730,000) in three months and recorded their biggest decline since August. The 10-year treasury yield fell 10 basis points to 1.42% on Friday after having surged to 1.60% on Thursday. Treasury yields had initially fallen after the PCE information release, they then rebounded to a higher level – triggering the indices slumps. The 10-year rate has increased by more than 50 basis points since the beginning of the year – a sharp rise for a benchmark for mortgage rates and auto loans. Despite the poor performance across the week all three indices concluded the month with modest gains: where the S&P finished with gains of 2.61% across February, while the Dow and Nasdaq climbed 3.17% and 0.93% respectively.

Europe and UK
The losses were not limited to the U.S. markets, as the Eurostoxx 600 posted its first negative week for the month of February at a 2.38% loss for the week as tech stocks plunged lower, retreating from their 20-year highs. Despite the disappointing week, the STOXX 600 saw a gain in February as energy, banking and strong travel/leisure sectors rallied with expectations of future economic reopening and vaccine rollouts. Core and peripheral Eurozone government bond yields rose as they tracked movements in U.S. Treasury yields. Despite recording its 3rd consecutive week of losses, dropping 1.48%, the Dax concludes the February with an increase of 2.63%. This comes as Q4 German gross domestic product (GDP) was revised upwards unexpectedly to a growth rate of 0.3% from an initial estimate of 0.1% on strong exports and solid construction activity. The full-year figure was increased to -4.9% from -5.0%. UK Prime Minister Boris Johnson unveiled a plan to gradually and irreversibly lifting lockdown restrictions in England from March 8th until June 21st most sectors of the economy and many social activities to be reopened by the 17th of May. British finance minister Rishi Sunak is expected to extend the jobs support program until at least May, along with a £5 Billion ‘Restart’ grant scheme to aid ailing businesses. The UK’s FTSE 100 Index came under pressure from a stronger British pound. The currency rose to its highest level in almost three years, reaching USD 1.42 before pulling back from this peak. Across the period, the FTSE 100 saw its first negative week of February, falling 2.12%, however, finishing the month with a gain of 1.19%. UK Gilt yields also rose in line with other developed markets.

Japan’s stock markets saw a decline on February’s last trading day, ending sharply lower across the holiday-shortened trading week, where markets were closed on Tuesday in celebration of the Emperor’s Birthday. For the week, the Nikkei 225 Stock Average declined 3.50%. Despite this drop, the Nikkei still managed to end the month with a gain of 4.71%. The broader TOPIX Index saw similar losses, receding by 3.34%, as the yen weakened, closing at JPY 106 against the dollar.

Emerging Markets

Chinese investors were saw steep drop-offs as the Shanghai Composite Index declined by 5.1%, while the CSI 300 Index dopped by a larger margin of 7.7%, marking the two indices worst respective weekly performance since October 2018. The weekly drop-offs came as news that China’s official manufacturing PMI fell to 50.6 in February from 51.3 in January. The official non-manufacturing PMI fell to 51.4 from 52.4 The Shanghai composite managed to hold onto a gain of 0.75% across February, while the CSI 300 was in the negative by 0.28%.  In credit markets, the yield on China’s sovereign 10-year bond was broadly flat as official loan prime reference rate remained unchanged, marking its 10th consecutive month. February marked the second month of net liquidity withdrawal by China’s central bank.

Indian stock markets concluded the month of February on a low note, as the Nifty and Sensex fell 3.76% and 3.80% respectively on Friday.  The sell-off is likely triggered by the sharp rise in bond yields and concerns over inflation. Banking and finance stocks saw the largest losses. The rise in inflation could push the US Federal Reserve to increase interest rates, an adverse factor for markets like India, that have seen major foreign currency inflows across the last year. The rising crude oil prices and increasing geopolitical tension between the US and Syria aggravated the selling. Across the week, they Nifty and Sensex saw losses of 3.02% and 4.74% respectively. The two indices still managed to finish the month in strong positive territory with both closing just roughly 6.07% higher.

Major MENA markets registered sharp gains on Thursday, tracking a rise in global equities and a recovery in oil prices. Despite the positive sentiments, Dubai’s DMFGI had lost 1.90% across the week, marking its fourth consecutive weekly loss in February (a total decline across the month of 3.86%). Meanwhile Abu Dhabi’s ADX saw a marginal loss of 0.26%, concluding February with a net gain 0f 1.25%. Saudi Arabia’s Tadawul All Share index saw a rise of 1.22% across the week. The kingdom raised 1.5 billion euros ($1.83 billion) on Wednesday in a two-tranche bond deal after receiving orders for more than 3.75 billion euros. Meanwhile, A U.S. intelligence report stating Crown Prince Mohamed Bin Salman approved the 2018 killing of journalist Jamal Khashoggi is expected to weight on market returns across the week.

Commodities and Forex

Oil prices continued to climb last week on the back of demand expectations, supported by accelerating vaccine rollouts and easing lockdown measures. Following the gains in the U.S. dollar, Oil prices fell on Friday with a strengthened U.S. dollar. Oil prices fell as the dollar rallied, WTI ending the week at $61.50 per barrel and Brent ending at $66.13. Spot gold saw its lowest levels since June 2020, falling to $1,716.85 per Oz. on Friday. Across February, Gold has now seen its worst monthly fall since 2016, having declined 6.57% across the month amid rising treasury yields.

The U.S. dollar surged on Friday as 10-year yields rose sharply. The U.S. dollar index, rose 0.87% against a weighted basket of currencies to 90.91. The dollar index saw a 0.06% increase across the week, concluding February with a 0.38% increase.


Commodities 02/26/21 01/31/21 12/31/20 12/31/19
WTIOil ($/barrel) $61.50 $52.20 $48.52 $61.06
Brent Oil ($/barrel) $66.13 $55.88 $51.80 $66.00
Gold ($/oz) $1731.60 $1850.30 $1899.60 $1529.30
Natural Gas ($/mmBtu) $2.77 $2.56 $2.54 $2.19


Currencies 02/26/21 01/31/21 12/31/20 12/31/19
Euro ($/€) 1.2078 1.2132 1.2226 1.1229
Pound ($/£) 1.3945 1.3702 1.3653 1.3265
Japanese Yen (¥/$) 106.64 104.74 103.29 108.59
Swiss Franc (CHF/€) 1.098 1.0806 1.0821 1.0853
Chinese Yuan Renminbi (CNY/$) 6.4722 6.4555 6.514 6.9615

Index Valuations

Index Return

Fixed Income

Blend Fund Performance Year To Date:

Blend Fund Performance Since Inception:

Direct Fund Name

Zurich Managed Funds

(28/02/21) 1 week % 1 month % 6 months % YTD % 1 year % 2 years %
US dollar Adventurous -3.45% -1.13% 14.94% 1.46% 28.18% 41.95%
US dollar Blue Chip -2.21% -1.12% 6.60% 0.68% 17.70% 30.67%
US dollar Cautious -2.02% -1.82% 2.51% -0.85% 11.32% 23.15%
US dollar Defensive - - - -2.55% 4.97% -
US dollar Performance -2.35% -0.53% 11.13% 1.98% 23.37% 36.81%

Zurich Mirror Funds

(28/02/21) 1 week % 1 month % 6 months % YTD % 1 year % 2 years %
ZI CGWM Affinity -1.50% -0.21% 13.64% 2.36% 18.77% 29.34%
ZI CGWM Diversity -0.87% -0.13% 10.47% 1.36% 13.28% 22.47%
ZI CGWM Opportunity -1.54% 0.06% 14.70% 3.01% 20.48% 27.34%
ZI Emirates Active Managed fund -1.63% -0.31% 9.38% 2.41% 7.59% 13.25%
ZI Emirates Balanced Managed -1.70% -1.00% 5.52% 0.93% 5.20% 10.85%
ZI Emirates Emerging Market Debt -0.53% -0.23% 6.59% -0.08% 3.22% 13.13%
ZI Emirates Emerging Markets Equity -2.68% -2.12% 21.56% 7.01% 25.09% 24.77%
ZI Emirates Islamic Balanced Managed fund -2.24% -1.26% 9.41% 3.48% 8.96% 16.07%
ZI Loomis Sayles US Growth Equity -3.09% -1.13% 6.27% 0.39% 29.30% -

Disclaimer: This document is for information purposes only. This document does not constitute an offer, an invitation to offer, or a recommendation to enter into any transaction, nor does it constitute investment advice. Its contents are derived from sources generally believed to be reliable although no representation is made that it is accurate or complete and we accept no liability with regards to your reliance on the same. Past performance is not necessarily indicative of future results and prices and availability are subject to change without notice. Availability shall be subject to the relevant law and regulation and pursuant to the relevant Fund Prospectus and relating legal documents.  Where overseas investments are held, the rate of exchange may cause the value of investments to go down as well as up. The value of investments and any income from them can go down as well as up and you may not get back the amount originally invested. Chart Source: GSAM and Bloomberg as of close of trading on August 31, 2017. Chart data shows next 12 month P/E ratio from August 2007 to the current period. 12m forward P/E(x) refers to price-to-earnings ratio for the next 12 months, which is a valuation measure applied to respective broad equity indices. Please see additional disclosures at the end of this presentation. All data is denominated in USD unless noted otherwise.† Data is released weekly, as of Monday. If data displays an asterisk: 

* Data is lagged by 1 day.
**   Data is lagged by 2 days.