Week from 30 November to 6 December 2020
Once again, we could have copied last week’s comments as the global stock market rally shows no sign of abating though the latest U.S. jobs report highlighted a slowing labor market with only 245k nonfarm payrolls added in November (consensus estimate of 460k). Many economists see this weak data as an indication that the next round of stimulus is arguably needed. The good news came from House Speaker Nancy Pelosi who stroke an upbeat tone on coronavirus stimulus talks. That was enough to propel stocks higher. The major U.S. indexes therefore rose to new record-closing highs on Friday (Nasdaq: +2.12% week-over-week, Russell 2000: +2.00%, S&P 500: +1.67%, and DJIA: +1.03%).
By contrast, European equity indexes were treading water ahead of the ECB’s upcoming December monetary policy meeting (Eurostoxx 600: +0.21%, DAX 30: -0.28%, CAC 40: +0.20%) while the EUR-USD pair was strengthening to a new 31-month high of $1.2141. Annual inflation remained negative in the eurozone last month (-0.3%).
APAC markets were up in the wake of buoyant Chinese factory activity and expectations of continuing fiscal and monetary support. The Shanghai Composite gained +1.06%, South Korea’s Kospi jumped +3.72% while Japan’s Nikkei edged up by +0.40%. The S&P/ASX 200 added +0.5% after Australia’s central bank said the country’s economy would also need fiscal and monetary support.
Among the S&P sectors, energy led the pack (+4.47%) for the fourth week in a row. Benchmark WTI crude oil indeed surged to a nine-month high ($46.26/barrel) despite the fragile agreement between OPEC and Russia. After days of tense discussions, they eventually agreed on the need for output restraint. Health care (+2.84% though Pfizer and BioNTech halved their original estimates for how many coronavirus vaccine doses could be shipped globally by the end of this year) and information technology (+2.78% with Apple stock up +4.85%) also fared well. Financials held their own (+1.81%) as hopes for a stimulus package pushed Treasury yields higher (benchmark U.S. 10-year yield rising from +0.84% to +0.97%).
By contrast, utilities continued their losing streak (-2.2% WTD, worst sector over the last three weeks with a cumulative loss of -5.8%).
As regards credit markets, high yield bonds (+0.61% in Europe, +0.92% in the U.S.) outperformed investment grade bonds (-0.10% in Europe, +0.31% in the U.S.), but emerging debt posted the best performance (+1.54% in local currencies, positive return for the fifth straight week).
Lastly, gold clawed back $54 (up 3% at $1,835.9/Oz), after losing 8.7% over the last three weeks.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-12-04/global
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