Rally time!
This past week all three major North American markets celebrated Saint Patrick's Day by trading and closing well into the green. The Dow ended the week up 5.5%, Nasdaq was up 8.2% and while the TSX was up only 1.7% it hit a new all time high on Friday. Markets rallied strongly as reduced nervousness and no more guessing about rate increases allowed investors to place their market bets with a bit more confidence. The U.S. central bank finally acted on Wednesday to launch a new monetary cycle, with its first rate hike since the end of 2018. As some expected, the hike was for the minimum quarter point instead of a half point as some others had feared. Raising rates reduces the money supply in circulation and, theoretically, calms inflation.
Life science investors also felt the luck of the Irish as the XBI ETF rallied by a solid 8.9% from last week's close and up 14.7% from it's 52 week low reached this past Wednesday. Many of the smaller US listed life science companies we follow had very strong rallies. Let's see if this rally has staying power as the index has been looking for a bottom and is still down 37.9% from exactly one year ago. One question we were asking this week is if the Covid trade might be coming back. A number of countries have been relaxing Covid restrictions at the same time that countries like China and South Korea are seeing large spikes in cases with Hong Kong and Shenzhen now in Covid lockdowns. Even countries like Austria and England, who have recently removed restrictions, are seeing big spikes in cases. As many experts have warned, Covid is far from over.
Last week it was nickel, this week urea? Fertilizer prices climbed to a fresh record, as sales from Russia (one of the world's top producers) are disrupted, and super-expensive natural gas in Europe curtails output. Urea prices hit all time highs on Friday.
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