Last Week in the City: Donald finally admits he lost

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 8 January 2021.

This content is more than 6 months old now, please visit the news area of this site for more recent content

  1. Garry White

After years of arguments, intransience, claims and counter-claims – eleventh hour discussion produced a Brexit agreement between Brussels and London over Christmas. Markets took the news in good spirit, but the rising number of Covid-19 infections and further economically damaging lockdowns were more of a priority in global markets.

In the US, the presidential transition from Donald Trump to Joe Biden appeared to be heading for disaster after a pro-Trump mob stormed the Capitol building

US equities hit further all-time highs as Congress confirmed the election of Joe Biden as president, despite protests and violence. The Nasdaq Composite crossed 13,000 for the first-time ever.

The FTSE 100 rose 6% over the week, with the more UK-focused FTSE 250 was up about 3% by the middle of Friday’s trading session.

The first quarter of 2021 will be weak economically because of continuing lockdown restrictions – but, what next? Read Chief Investment Officer Jon Cunliffe’s monthly summary here.

***************************

Social Entrepreneurism: Will the Covid-19 recession be a catalyst for entrepreneurial activity – and if it is – what role should tax policy play? Join the debate here.

***************************

Covid-19

Upbeat news on vaccine distribution and development was overshadowed by concerns about the near-term outlook – as the number of Covid-19 cases in the US and Europe continued to surge. Many countries are expected to see economic and fiscal pressures continue through the first quarter of 2021, as new variants boost infection rates resulting in lockdowns being re-imposed or extended.

Vaccines

Almost 1.5 million people in the UK have been vaccinated against Covid-19, Prime Minister Boris Johnson said. He promised to quickly expand the programme to inoculate the most vulnerable categories by mid-February.

Russia has vaccinated more than 1 million people against Covid-19 with its state-developed and finance inoculation, according to Alexander Gintsburg, head of the Gamaleya Institute which developed the vaccine called Sputnik V. Russia recorded its lowest infection rate for more than six months in December, but still ranks behind only India and Brazil as the country that recorded the most infections throughout the pandemic.

German Chancellor Angela Merkel said she was “open” to the idea of producing Russia’s Sputnik V vaccine in the European Union, amid criticism the bloc was moving too slowly in the approval process.

Poorer nations could start receiving vaccines as soon as this month from a World Health Organisation-backed programme, the body’s immunisation director Kate O'Brien confirmed. The ‘Covax facility’ has now raised $6bn of the $7bn that it needs to help finance deliveries to 92 developing nations with limited or no means to buy vaccines themselves over the course of 2021.

Infections

UK daily coronavirus cases rose above 60,000 for the first time. Weekly data suggested that one in 50 people in private households in England had Covid-19 last week – and one in 30 in London. As a result, a strict new national lockdown began on Tuesday, amid warnings that a Coronavirus variant, first identified in Kent, was spreading so rapidly it risked overwhelming the healthcare system within 21 days.

However, this will be the last lockdown Britain will have to have to endure but testing and vaccine programmes will be a feature of life into 2022, health minister Matt Hancock said.

The UK extend a ban on travellers entering England to a further 11 southern African countries, to prevent a new Covid-19 variant identified in South Africa entering the country.

American hospitalisations due to Covid-19 hit a record on four-consecutive days – with the country also recording the largest number of daily deaths related to the infection. Los Angeles and surrounding areas are suffering particularly acutely.

Cases in Europe surpassed 25 million, according to Reuters’ data, with several countries reinstating or extending lockdowns. Germany, which is suffering more severely now than during the outbreak last spring, extended its nationwide lockdown until the end of January.

A spike in infections in cities all over the world resulted in new measures being introduced. Japan declared a state of emergency in Tokyo; the Chinese City of Hebei barred 11 million people from leaving; and Argentina introduced a night-time curfew. 

Economics

Inflation is not the enemy of central banks right now and their printing presses continue to run. Money creation look set to continue and government debts will rise. We look at central bank policies around the world here.

Geopolitics

Donald Trump finally conceded defeat in the US presidential election to Joe Biden for the first time – a day after his supporters stormed the US Capitol building. The president said he was "outraged" by Wednesday's “heinous” attack, which came as politicians in Congress certified Mr Biden's victory. A pro-Trump mob overwhelmed police officers and invaded the Capitol building. The violence was widely condemned – and led to a series of resignations from the Trump administration, with many accusing the losing candidate of inciting violence.

The storming of the seat of US democracy led to calls for Mr Trump to be formally removed from office using the 25th Amendment. These included his former White House chief of staff John Kelly, even though there is just 13 days left in his presidency.

Two run-off elections in Georgia will decide which party – Republican or Democrat – will win control of the Senate. The results are important for markets and we examine potential outcomes here.

One of the few worries that investors had before the Covid-19 pandemic was the deterioration in the mood over world trade. Covid-19 changed all that – but now trade is moving back up the agenda. We look at what lies ahead here.

Technology

Elon Musk became the richest person in the world, with a net worth of more than $185bn. Shares in his electric vehicle company Tesla continue to surge – and he now surpasses Jeff Bezos in overall paper worth. The Amazon founder has a mere $184bn to his name, according to Forbes.  

As private companies and billionaires pour investment in space exploration, the rate of progress will increase. Now exploring the cosmos is implicitly about profit, humanity’s colonisation of space is about to take-off. Garry White looks at the revitalised space race here.

Retail

After Christmas comes retail’s traditional festive-trading reports. This year’s statements will be mixed – to say the least – but J Sainsbury delivered a pleasingly-upbeat statement. A bumper Christmas prompted management to upgrade its annual profit guidance by £60m – with like-for-like sales jumping 9.3% year-on-year over the period. Rival Wm Morrison also reported a big increase in sales – and retail analysts Kantar declared December a record month for revenues at UK supermarkets. However, profits across the sector were hit by the cost of ensuring adequate social-distancing measures were in place – and providing cover for staff who needed to self-isolate.

There was grim news from what was one of Britain’s high-street heroes in the pre-pandemic world. Greggs predicted 2020 will produce its first-ever annual loss – and the bakery chain’s management does not expect profits to recover until 2022.

Marks & Spencer reported another big fall in clothing and homeware sales in its Christmas quarter, hurt by lower demand and pandemic-related store closures. Revenue in its clothing and home division slumped 25.1% in its third quarter, having fallen 21.3% in the previous three months.

Energy

Oil prices hit an 11-month high after Saudi Arabia's unexpected deepened its oil-output cuts. Brent crude futures rose by almost 6% over the week to trade at about $54.90 a barrel.

Travel

Boeing agreed to pay $2.5bn to settle US criminal charges that it hid information from safety officials about the design of its 737 Max planes. The US Justice Department said the firm chose "profit over candour", impeding oversight of the planes, which were involved in two deadly crashes. About $500m will go to families of the 346 people killed in the two accidents.

Ryanair will scrap most flights between the UK and Ireland starting in a fortnight. The airline unveiled massive cuts to its schedule from 21 January in response to the latest Covid-19 lockdowns. Management warned that “draconian” restrictions needed to be removed.

National Express will suspend its entire national network of coach services from midnight on Sunday. Management said tighter pandemic-related restrictions and falling passenger numbers had prompted the decision. It hopes to restart services in March.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

More from author

  1. Garry White

    Last Week in the City: A single-shot vaccine approaches

    Date: 15th Jan 2021 12:03pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  2. Garry White

    Trump team rows back on tough China sanctions

    Date: 14th Jan 2021 12:24pm

    The Trump administration has scrapped plans to blacklist Chinese tech giants Alibaba,...

  3. Garry White

    Last Week in the City: Donald finally admits he lost

    Date: 8th Jan 2021 12:35pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

Most read articles

  1. Last Week in the City: Donald finally admits he lost

    Last Week in the City: A single-shot vaccine approaches

    Date: 15th Jan 2021 12:03pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  2. Last Week in the City: Donald finally admits he lost

    Volatile markets reflect fears of reality

    Date: 13th Jan 2021 10:37am

    The gap between the reality of Covid-19-torn economies and equity markets is still gr...

  3. Last Week in the City: Donald finally admits he lost

    Last Week in the City: Donald finally admits he lost

    Date: 8th Jan 2021 12:35pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

Investment involves risk. You may get back less than invested.