Week from 28 to 31 December 2020
US equity indices put an end to a chaotic year on record highs. Investors can thank the central banks and governments for their unprecedented liquidity injections. The S&P 500 was up +1.43% week-over-week and therefore rallied +16.26% year-to-date despite the socio-economic impacts of the COVID-19 pandemic. The Dow Jones rose 1.35% WTD (+7.24% YTD) while the Nasdaq Composite gained 0.65% WTD (+43.64% YTD, a striking performance which reflects big tech’s strength). Unlike past weeks, small cap stocks lagged behind their large cap counterparts (Russell 2000 down -1.45% WTD, but up +18.36% YTD).
All the S&P sectors finished the week in positive territory except for energy (-0.43%) which was also the worst performer in 2020, losing more than 37% while information technology, the best performer, jumped 42% over the year. The other winning sectors were consumer discretionary (+32.07% YTD), communication services (+22.18% YTD) and materials (+18.10% YTD). Surprisingly, health care only ranked fifth (+11.43% YTD, i.e. well below the broad index).
European markets closed moderately higher (MSCI EMU: +0.37% WTD, EuroStoxx 600: +0.77% WTD), underperforming the US benchmarks once again. Sadly, most of them exhibited negative returns in 2020 (MSCI EMU and Eurostoxx 600 down -2.73% and -4.04% respectively).
Overall, APAC markets did much better (Nikkei: +2.95% WTD, +16% YTD; Shanghai Composite: +2.25% WTD, +13.87% YTD; Nifty 50: +1.69% WTD, +14.9% YTD), in line with US indices.
On the interest rate front, US bond yields remained virtually unchanged, with the 10-year U.S. Treasuries yield down 1 basis point at +0.93% (level twice lower than the yield displayed a year ago).
Credit markets ended the year with a flourish. Demand for IG corporate bonds (+0.20% WTD in Europe, +0.57% in the US) and high yield bonds (+0.11% WTD in Europe, +0.53% in the US) increased. Emerging debt followed suit (+0.43% WTD in local currencies). 2020 was a positive year for all the segments of the corporate bond market (best performer: US IG bonds up almost 10%, poorest performer: HY Euro Bonds up +1.5%).
Lastly, gold closed at $1,895.1/Oz (+0.81% WTD and more than +22% over the year) against the backdrop of a weaker dollar (EUR-USD up +0.43% WTD, +9.6% YTD).
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Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2021-01-01/global
