Week from 14 to 20 December 2020
Global stocks bounced this week despite a rapidly spreading variant of the coronavirus in the UK, as investors remained hopeful that lawmakers in Washington could complete a $900bn economic relief package. They eventually reached an agreement on Sunday that is expected to have enough support to pass both chambers of Congress.
The Dow Jones Industrial Average rose 0.44%. The S&P 500 was up 1.25% with Tesla Inc. included in the benchmark index, while the Nasdaq Composite gained 3.05%. Small cap stocks outperformed large cap stocks (Russell 2000 up 3.05%). The CBOE Volatility Index dropped by 7.5% to 21.57, in spite of the quadruple-witching day.
In marked contrast to last week, information technology was the best sector (+3.20%) led by Twitter (+8.61% after an upgrade from JP Morgan) and Apple (+3.47% on signs of strong demand for its latest iPhones). Consumer discretionary stocks also fared well (+2.32%), shrugging off consumer weakness thanks in part to a rise in Chipotle (+9.12%), eBay (+8%), and Hasbro (+5.4%). On the flip side, it was a tougher period for energy (-4.26% WTD) which broke a 6-week winning streak (rebound of more than 41%) though the Energy Information Administration reported Wednesday that U.S. crude inventories fell by 3.13 million barrels for the week ended December 11. Another sector finished in negative territory (communication services: -0.46%) after struggling for direction throughout the week.
European equity markets were also bullish (MSCI EMU up: +1.68%) even if several countries, including Germany, introduced a full lockdown until January. In Asia, India led the pack (Nifty up +1.83%) while the Shanghai Composite gained +1.43% in the wake of the reshuffle of its composition (tech companies replacing financial and energy firms).
Treasury yields moved higher (US 10-year T-Note yield at +0.95%) and most credit markets posted a seventh positive week in a row. High yield bonds gained +0.10% in Europe and +0.27% in the US. Emerging debt jumped 1.23% (in local currencies). IG bonds rose 0.28% in the US but edged down -0.3% in Europe.
Lastly, gold closed at $1,885.7/Oz (+2.49% WTD) and US dollar faltered again (EUR-USD up 1.06%).
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-12-18/global
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