Please see below this week’s Monday Market Update from Blackfinch Investments – received today 01/02/2021
Blackfinch Group – Monday Market Update – Issue 27 | 1st February, 2021
UK COMMENTARY
• The International Monetary Fund (IMF) downgraded its forecasts for the UK economy for 2021, revising its previous prediction of 5.9% to 4.5%. This follows the contraction of 10% in 2020, the biggest fall of any G7 economy.
• According to the Office for National Statistics (ONS), the unemployment rate in the three months to November 2020 was estimated at 5.0%, 1.2 percentage points higher than one year ago and 0.6 higher than the previous quarter. Over the same period, the redundancy rate hit a record high of 14.2 per thousand.
• The Prime Minister said there is “not enough data to know when it will be safe to reopen our society and economy”. MPs will set out a plan to exit lockdown when they return from the half-term break on 22nd February, based on the number of infections and vaccinations. As a result, children in England are not expected to return to the classroom until 8th March.
• Footfall at UK retail locations recovered, up 9% on the previous week. Data revealed that footfall over the whole of 2020 was down 39.1% on 2019.
• The UK Government introduced its ‘red list’ for mandatory hotel quarantine, which will mostly affect UK citizens and residents, since nationals from most high-risk countries are not allowed to enter Britain. It will apply to inbound travellers from 22 countries including South Africa, several countries in South America and also Portugal, because of its ties with Brazil.
US COMMENTARY
• Market commentators relished a widely publicised battle between multi-billion-dollar hedge funds and a group of retail traders from a Reddit chat room. The latter have been pumping the price of GameStop (and others), which some hedge funds had heavily shorted. The result was a ‘short squeeze’ resulting in extraordinary moves in share prices.
• US lawmakers continue to debate the $1.9 trillion stimulus plan put forward by President Biden.
• The declining trend rate of COVID-19 cases remains steady, with cases falling by about 22% per week. The seven-day average has fallen 32% from its 8th January peak, and is now below its pre-Thanksgiving level.
• GDP data showed the US economy grew 4% in the fourth quarter, but shrank 3.5% for the whole of 2020, its worst annual performance since 1946.
EUROPE COMMENTARY
• The European Union (EU) warned it will tighten exports of COVID-19 vaccines to non-member countries, such as the UK. The warning came after AstraZeneca, which was due to provide 80 million vaccine doses to EU member countries in the first quarter of 2021, announced it would only be able to deliver around half of the agreed quantities. The row comes amid a fall in supplies of the Pfizer/BioNTech vaccine, which is also slowing down the European rollout.
• France and Germany announced their fourth quarter GDP flash readings. The French estimate showed a contraction of 1.3% on a quarterly basis, but economists were expecting a decline of 4.0%, a drop from the 18.5% growth registered in the third quarter of 2020. Over the same period, the German economy expanded 0.1%, just topping the 0.0% consensus estimate. This was also a fall from the 8.5% growth posted in the third quarter.
GLOBAL COMMENTARY
• The IMF revised its 2021 global growth forecast to 5.5%, up from its 5.2% prediction in October, but cautioned that new variants of the virus are a concern for 2021’s outlook.
COVID-19 COMMENTARY
• Johnson & Johnson announced its vaccine candidate was 66% effective in preventing moderate to severe COVID-19, 28 days after vaccination. Although it falls short of its competitors in terms of efficacy, the Johnson & Johnson vaccine only needs to be administered with one shot, making its rollout easier.
• The row between AstraZeneca and the EU over COVID-19 vaccines culminated in approval on Friday afternoon as the European Medicines Agency recommended granting conditional marketing authorisation for use in adults aged 18 or over. It is the third COVID-19 jab approved in the bloc.
A good input from Blackfinch, providing a summary of global events over the past week. These updates are useful for keeping up to speed with developments in the markets.
Please continue to check back for our latest blog posts and updates.
Charlotte Ennis
01/02/2021