Tech stocks lead the way as yields ease back

Tech stocks are on the rise, as falling jobless claims help drive yields lower. Meanwhile, the FTSE 100 continues to outperform, with the construction PMI hitting the highest level since 2014. 

• FTSE 100 outperforms, as construction PMI hits highest level since 2014
• US jobless claims rise, but recent NFP figure highlights improving job market
• Tech sector outperforms, lifting S&P 500 into fresh highs

The FTSE 100 is once again outperforming its mainland European peers, with another bout of sterling weakness coming despite allayed fears of a slowdown in the vaccination programme. A surge in UK construction activity comes as no surprise given the recent recovery, but that rapid expansion in the sector has done little to help bolster a pound that has clearly lost its mojo. While todays UK data helped reiterate a theme of economic improvement, the US jobless claims release did quite the opposite. A surprise rise for both this and last weeks initial jobless claims serve to highlight a stuttering economic recovery despite recent stimulus measures. Nevertheless, last week’s impressive 916k payrolls figure does highlight the improvements we are seeing in the US employment picture, with recent stimulus measures likely to help bolster the recovery as the vaccination push takes effect.

Tech stocks are helping to lift the wider market today, with weakening treasury yields providing upside for the yield sensitive sector. Despite a dramatic rise in yields over the course of February in particular, we have seen that upward trajectory ease significantly in a move that has alleviated fears around growth stocks. The sheer size of the tech sector means that any significant move plays a major role in boosting the US indices, with the S&P 500 reaching record highs thanks to the likes of Microsoft, Apple, Tesla, and Amazon. Tesla have enjoyed a welcome boost on the news that Joe Biden aims to set aside an impressive $100 billion for EV rebates in a bid to ramp up the transition from carbon to electric vehicles. The prospect of a new $2.25 trillion infrastructure package brings substantial benefits for some sectors, yet others will no doubt worry more about the rise in corporation tax that appears to be on the horizon. Nevertheless, with the past year having seen a huge global increase in fiscal spending, increased taxes appear to be somewhat of a foregone conclusion for the coming year.