Tax hike shock fades on Wall Street

The week is ending on a more positive note for Wall Street, although European markets continue to struggle. US services activity is rebounding at a rate not seen for at least 11 years, as the PMI for the sector hits 62.2. The European figures remain strong as well, but without the benefit of fiscal stimulus and a still-struggling vaccine response it is perhaps harder to see whether these parts of the global economy can continue to recover at a similar pace to the US. Considering the significant changes expected by the Biden tax hike US stocks are remaining quite resilient, helped along by the continued good news flowing from earnings season. So far the reporting period has gone well, and few surprises have appeared to rock the boat. 

Next week of course sees the latest Fed meeting, and the release of Q1 US GDP figures. Powell is expected to leave everything on hold for now, continuing his refrain that the jobs recovery has much further go to, even if the overall picture is very encouraging. This should keep the supportive outlook for risk assets, and will help to extend the remarkably quiet atmosphere in markets throughout the year so far – after 2020’s volatility, 2021 continues to surprise, but in its calm and ordered way, with little so far of the madness that characterised its predecessor.