While China's A-share market was closed for the five-day Lunar New Year holiday, global financial markets experienced significant upward momentum. Major U.S. indices reached unprecedented heights, commodities rallied across multiple sectors, and Bitcoin shattered the $50,000 psychological barrier, creating a fascinating interlude in global finance.
U.S. Stock Markets Hit Record Highs
During the holiday period when Chinese markets were inactive, Wall Street embarked on a record-setting spree. The Dow Jones Industrial Average peaked at 31,543.82 points on February 11, establishing a new historical benchmark. Following closely, the S&P 500 closed at 3,937.23 points on February 12, likewise marking an all-time high. The Nasdaq Composite joined the record-breaking trend, reaching 14,109.12 points in intraday trading on February 10.
This remarkable performance coincided with unprecedented capital inflows. Bank of America data revealed that global equity funds attracted a record $58.1 billion during the week ending February 10, with the majority flowing into U.S. large-cap stocks. American markets alone drew $36.3 billion—the highest weekly inflow in history—with large-cap funds receiving $25.1 billion of that total.
Global Indices Join the Rally
The bullish sentiment extended beyond American shores. Japan's Nikkei 225 Index briefly touched 30,000 points on February 15, a level not seen since August 1990. This milestone followed the broader Topix index's achievement of its highest point in nearly three decades.
Supporting this market optimism, Japan's economic data exceeded expectations. Cabinet Office figures showed the country's GDP grew at an annualized rate of 12.7% in the fourth quarter of 2020, significantly surpassing the 9.5% forecast by economists.
Jeffrey Young, former global head of foreign exchange at Citigroup and co-founder of DeepMacro, offered insight into the market dynamics: "The nature of the COVID-19 recession has been unusual—very deep but not particularly broad. The depth came from government-mandated economic lockdowns, but the fundamental global economy remains sound without severe imbalances."
Young further noted that most economies still operate below capacity, suggesting that markets haven't fully priced in the expected recovery. "While some sectors may be in bubble territory," he added, "most equities still have room to grow, and bond yields could move higher."
Commodities Experience Widespread Gains
The holiday period also witnessed substantial activity across commodity markets. Oil prices continued their upward trajectory, with WTI crude hovering around $60.64 per barrel and Brent crude near $63.33 per barrel on February 15—both reaching their highest levels since December 2019.
This rally followed OPEC's announcement that member nations had cut production by 21 billion barrels since April 2020. Beyond energy markets, palladium futures breached the $1,300 per ounce mark for the first time since 2014, while tin prices on the London Metal Exchange surged over 4% to reach their highest point since 2013.
Analysts at JPMorgan highlighted that a new commodity "supercycle" may be underway, driven by post-pandemic economic recovery, accommodative monetary policies, a weaker U.S. dollar, rising inflation expectations, and environmental policies. "We believe the trend of inflation is reversing, which poses significant risks for multi-asset portfolios," noted quantitative analyst Marko Kolanovic.
Institutional Investment Shifts
Major investment firms revealed significant portfolio adjustments during this period. Bridgewater Associates, the world's largest hedge fund, substantially increased its consumer stock holdings. The firm's top five purchases included Walmart, Pinduoduo, Procter & Gamble, and Coca-Cola, alongside iShares MSCI Core Emerging Markets ETF. Bridgewater also increased its positions in Alibaba and NIO by 19% and 25%, respectively.
Simultaneously, prominent investment firm Hillhouse Capital disclosed its quarterly holdings, maintaining significant exposure to Chinese equities which represented nearly 30% of its positions by number and over 60% by market value. The firm's investment focus remained on three primary sectors: healthcare, hard technology, and consumer goods.
Notably, Hillhouse established Pinduoduo as its largest position while divesting from several electric vehicle manufacturers despite their strong performance. The firm clarified that it maintained its bullish outlook on the new energy sector, particularly materials and battery technologies within the supply chain.
Pinduoduo emerged as a particular favorite among institutional investors, appearing as a top holding for both Bridgewater and景林资产 (Jinglin Asset Management). From the fourth quarter of 2020 through February 12, 2021, the stock surged an impressive 165.12%.
Bitcoin Breaks Through $50,000
Digital assets joined the global rally with particular vigor. Bitcoin, the leading cryptocurrency, surpassed $50,000 for the first time on February 16, continuing its remarkable ascent. This milestone followed a brief setback when the digital currency retreated 5.6% after nearly reaching $49,376 on February 14.
The legitimacy of cryptocurrencies received a substantial boost from traditional financial institutions during this period. BNY Mellon, America's oldest bank, announced it would begin providing cryptocurrency custody and transfer services to clients. "Digital assets are becoming mainstream," stated Roman Regelman, CEO of BNY Mellon's asset servicing and digital businesses.
Payment giant Mastercard similarly revealed plans to support select cryptocurrencies on its network, while Bloomberg reported that Morgan Stanley's $150 billion Counterpoint Global investment division was considering Bitcoin investments. Notably, Bitcoin appeared for the first time in Bank of America's official asset performance report, showing a remarkable 65.4% return year-to-date as of February 12—the highest among all investment categories.
Market analysts cautioned that the cryptocurrency market showed signs of overheating. William, chief researcher at a digital asset exchange platform, noted: "After Bitcoin surpassed $20,000 in December, we witnessed massive inflows of retail investors, sometimes overwhelming exchange platforms. This indicates a structural shift from institutional to retail-driven markets, characterized by irrational exuberance and heightened volatility."
He added a note of caution: "Speculation has become the dominant factor in Bitcoin markets, which have developed substantial bubbles. We advise investors to maintain rationality and exercise restraint, particularly avoiding excessive leverage."
For those interested in tracking these dynamic market developments in real-time, you can explore advanced market analysis tools that provide comprehensive coverage across traditional and digital assets.
Frequently Asked Questions
Why did global markets perform so well during China's holiday?
Multiple factors contributed to the strong performance, including optimistic economic recovery expectations, continued monetary stimulus, and positive corporate earnings reports. With China's market closed, global investors focused on reopening narratives and vaccine rollouts.
What is driving commodity price increases?
Analysts point to a combination of supply constraints (particularly in oil), rising demand as economies reopen, inflationary expectations, and a weaker U.S. dollar. Some believe we're at the beginning of a new "supercycle" for commodities.
Are Bitcoin gains sustainable?
While institutional adoption is increasing, many analysts warn that current price levels incorporate significant speculation. The market appears to be in a euphoric phase where retail investors are driving prices potentially beyond fundamental values.
How are major investment firms positioning their portfolios?
Institutional investors are showing continued interest in consumer stocks, Chinese equities, and new energy technologies. Many are balancing traditional value investments with selective growth opportunities in emerging technologies.
What risks should investors consider?
Market valuations across many asset classes appear stretched, suggesting increased vulnerability to corrections. Particularly in cryptocurrency markets, volatility remains extreme, and leverage magnifies both gains and losses.
How can investors track these diverse markets?
Comprehensive market monitoring platforms offer real-time data and analysis across global equities, commodities, and digital assets, helping investors make informed decisions across different time zones and market conditions.