Weekly Market Insight

Latest Economic & Market Update 15th December 2020

15th December 2020

Good afternoon, it is December 15th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Markets optimistic on EU/UK Trade Deal
  • Irish economy set for 2021 rebound with consumer spending incentives and channels key – IBEC.

Currency, equity and bond price movements yesterday all indicated that there is a belief among traders that the UK and EU will agree a trade deal by the December 31st Brexit deadline. Sterling traded higher on Monday against both the dollar and the Euro, climbing 1.7% and 0.8% respectively. The GBP/EUR price movement is seen as the general barometer of the Brexit outcome. Meanwhile, the export-heavy FTSE 100 closed the day 0.2% lower. The UK’s top 100 company index is dominated by exporting companies and subsequent currency exposure. Sterling gains impact the profitability and share prices of the underlying firms when converting profits from foreign trade currencies into the stronger UK currency. The FTSE 250 is more domestic-focused and the indexed closed 0.7% higher, in line with the GBP/EUR daily change. The European and Irish indices, EuroStoxx 600 and ISEQ both rose, climbing 0.4% and 1.1% respectively. UK Gilt yields widened as investors sold the safe-haven asset. Bond yields go up when prices fall. The 10-year UK Gilt yields widened 5 basis points, trading at 0.22%. (Sources: FT and Irish Times)

Titled “Hope and Change”, Ibec’s Q4 2020 report provides a positive outlook for Irish businesses and investors. Previously in our daily Economic & Market Update, BlackBee has highlighted that the export sector has supported Ireland’s economy since the pandemic hit. IBEC, Ireland’s leading business lobby group, outlines that Ireland’s GDP will rise this year by 0.8%, the only country in the OECD to see economic growth in 2020. However, this is amid the backdrop on large contractions this year in consumer spending and investing, 12% and 19.7% lower than 2019 levels respectively. These figures are more in line with October’s 20% Covid-19 adjusted unemployment rate. As well as Ireland’s strong export sector, based on pharmaceutical companies, recovery in 2021 is likely to be driven by cash that has been saved by Irish households this year. As of October 2020, €11 billion had been saved, just over twice the amount put away this time last year. If the Irish government and businesses are able to create “the right incentives and channels, 2021 could be an extraordinarily strong year for consumer spending. This would, in turn, help to heal the labour market scarring from COVID” according to Ibec’s report. Consumer spending and investment is forecasted to grow 15.1% and 12.7% respectively next year.

Best & Worst Performers of Large Cap US Stocks on Monday
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Global Market Update
(as at close of markets 14/12/2020)