Please see below this week’s Monday Market Update from Blackfinch Investments – received today 07/12/2020.
Blackfinch Group – Monday Market Update
Issue 20 | 7th December, 2020
UK COMMENTARY
• The COVID-19 vaccine developed by Pfizer in conjunction with BioNTech was granted authorisation for use in the UK by regulators, with the first doses expected to be rolled out imminently
• The FTSE 100 hit its highest level since March thanks to a solid performance in pharma, mining and energy stocks
• House purchase mortgage approvals increased to 97,532 in October, from 92,091 in September, beating the forecast of 84,000, helped by the stamp duty holiday which has turbocharged the housing market
• Nationwide house price index rose 0.9% in November from October. The year-on-year increased quickened to 6.5% from October’s 5.8%.
• The UK was lifted out of ‘lockdown 2.0’ leading to many UK department stores experiencing a mini boom as shoppers rushed back through their doors. Meanwhile Arcadia group fell into administration, putting 13,000 jobs at risk.
• Tesco surprised markets by deciding not to accept its £585m of business rates relief from the government. Many of its peers followed suit providing a c.£2bn saving to the public purse.
• The manufacturing Purchasing Managers’ Index (PMI) rose to a 35-month high of 55.6 in November (revised up from the ‘flash’ reading of 55.2), up from 53.7 in October. PMI has now signalled expansion (i.e. above the 50.0 level) for six successive months.
• PMI appears to have been boosted by the stockpiling of critical inputs and increased demand from the EU ahead of the UK-EU transition arrangement deadline on 31st December
• Private new car registrations in November were 32.2% lower than in November 2019 caused by the second lockdown. They were up 0.6% year-on-year in October.
US COMMENTARY
• Both the Dow and S&P posted their best November returns since 1928 as hopes around vaccines and a stimulus package assisted sentiment
• US jobless claims fell from 787,000 to 712,000 undershooting the 775,000 consensus estimate. Continuing claims also fell to 5.52m from 6.09m, lower than forecasts of 5.8m. However, 245,000 jobs were added in November compared 638,000 on the previous month and it was the fifth month in a row employment has fallen in the US.
• This mixed jobs report added weight to the argument that further financial assistance and stimulus is needed to help the US economy
• A bipartisan $900 billion relief package bill has been put forward but is it unlikely to get much support as too many discrepancies exist
• Moderna has applied to the US Food and Drug Administration for emergency use authorisation for its COVID-19 vaccine
ASIA / AUSTRALIA COMMENTARY
• China’s Caixin manufacturing purchasing managers’ index (PMI) jumped to 54.9 in November, from 53.6 in October; the consensus forecast was for a reading of 53.5
• Australia’s economy expanded 3.3% quarter-on-quarter in September after a 7% quarter-on-quarter contraction in the June quarter
GLOBAL COMMENTARY
• The Organisation for Economic Cooperation and Development (OECD) now predicts that global Gross Domestic Product (GDP) will contract by 4.2% this year, which is an improvement on the previous forecast of -4.5%. At the same time, it lowered its 2021 forecast to 4.2% from 5%.
• OPEC+ ministers agreed to withdraw previous output cuts by no more than 500,000 barrels a day each month, starting in January, with production hikes subject to review each month helping to push up oil prices
COVID-19 COMMENTARY
• In the UK, cases and hospitalisations continue to fall, with some of the hardest-hit parts of the country reporting a halving in new cases since the second national lockdown began on November 5th
• The US reported 100,000 COVID-19 hospitalisations for the first time
Please continue to check back for our latest blog posts and updates.
Charlotte Ennis
07/12/2020