Week from 18 to 24 January 2021
US Stock indices ended in positive territory this time after Wall Street suffered its worst week (from 11 to 15 January) since October. US factory activity which surprisingly grew at record pace in January (IHS Markit Manufacturing PMI jumping to 59.1 in January from 58.3 in December, i.e. well above market forecasts of 56.5) and hopes of new spending in addition to the recent rescue plan overshadowed continued concerns over the economic impact of the coronavirus pandemic.
By contrast, European markets were almost flat (MSCI EMU up 0.13%) against a backdrop of very low vaccination rates across the continent even though the closely watched PMI index showed that the world’s largest trade bloc is heading for a new recession.
Overall, APAC markets fared well (Nikkei: +0.39%, Shanghai Composite: +1.13%, Kospi: +1.77%, S&P ASX 200: +1.27%) except for India (Nifty 50 down 0.43%). China reported Monday that its economy had grown 2.3% in 2020 which is some kind of miracle.
Among the S&P sectors, communication services (+5.95%), information technology (+4.38%) and consumer discretionary (+3.09%) played a major role in the US rally this week as the FAAMG stocks racked up big gains (Facebook: +9.21%, Apple: +9.38%, Amazon: +6.06%, Microsoft: +6.25%, Google-Alphabet: +9.50%). Netflix did even better with a double-digit performance (+13.49%)! At the bottom of the league table, financials stocks broke their 5-week winning streak (-1.81%) with Bank of New York Mellon down 8% in spite of better-than-expected results. It was also a tough week for energy (-1.56%) as the International Energy Agency lowered its forecasts for global oil demand in 2021.
In the bond space, Treasury yields stayed relatively stable (US 10-year note at +1.1%, Germany 10-year Government bond at -0.51%). Corporate bond prices also remained quite steady (invesment grade corporate bonds: -0.10% in Europe, +0.16% in the US; high-yield bonds: +0.26% in Europe, +0.01% in the US). Emerging debt (-0.23% in local currencies) struggled again to limit losses.
Elsewhere, gold rose 1.44% to $1,856.20/oz, shining for the first time since New Year’s Eve, while EUR/USD traded 0.67% higher at 1.2172.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2021-01-22/global