Week from 21 to 27 December 2020
Volatility remained virtually unchanged (VIX at 21.53: -0.2% week-over-week) and trading was light in this holiday-shortened week. However, it was marked by a major event. The EU and UK eventually reached a post-Brexit trade deal just before Christmas. European equity markets moved higher on the news, recouping the losses suffered on Monday, in the wake of new COVID-19 restrictions. Overall, the broad market indices finished flat (MSCI EMU: +0.03% WTD). The situation was a bit more contrasted with country indices. The MIB 30 jumped +0.80% while the DAX 30 was slightly negative (-0.32%). The FTSE 100 also failed to close in the green (-0.41% WTD). The pound rose moderately to 90p per euro (+0.7% WTD).
In the US, the S&P 500 edged down by 0.17% and the Dow Jones edged up by 0.07%, shrugging off a delay to roll out the $900bn stimulus deal after Donald Trump suddenly demanded that Congress amend the bill. The Nasdaq Composite did better (+0.38%), notching an all-time high on Tuesday, supported by Apple (+4.19% WTD) following a Reuters report that the iPhone maker was targeting car production for 2024 with new battery technology. Among the S&P sectors, tech was one of the top two weekly performers (+0.82%), just behind financials (+1.94%), propped up by JP Morgan (+4.57%). All the others closed in the red, especially energy (-2.03% as oil prices dropped – WTI crude down 1.77%) though US inventory data showed crude and product inventories fell last week, easing worries about weaker fuel demand.
Small cap stocks continued to outperform their large cap counterparts, with the Russell 2000 rising almost 30% over the last eight weeks (+1.72% week-over-week).
APAC markets pulled back. The Hang Seng index lost -0.42% after China initiated an antitrust investigation into the e-commerce giant, Alibaba (share down -14.62%). Australian stocks (S&P/ASX 200) slid -0.16%, while Tokyo shares (Nikkei) fell -0.4%.
Yields on sovereign bonds were fairly stable (US 10-year T-Note yield at +0.94%, Germany 10-year Government bond yield at -0.55%) and credit markets paused for breath. IG corporate bonds treaded water: -0.22% in Europe (flat in the U.S.). Similarly, high yield bonds slid -0.11% in Europe (-0.01% in the US). Emerging debt broke a 7-week winning streak (-0.62% in local currencies).
Lastly, gold closed at $1,879.9/Oz (-0.31% WTD). The Euro went back and forth during the week, and eventually lost -0.41% against the US dollar.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-12-25/global
