Weekly Market Insight

Latest Economic & Market Update 21st December 2020

21st December 2020

Good afternoon, it is December 21st 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • European stocks sell off as new strain of Covid-19 sweeps through UK.
  • US lawmakers reach deal on stimulus package.

European stocks sold off on Monday morning on foot of dual concerns surrounding the new strain of coronavirus in the UK in addition to fears of the economic impact of further lockdowns in Europe. By mid morning the Euro Stoxx 600 and FTSE 100 benchmark indices were down 3.4% and 3% respectively with travel companies leading the decline. Oil prices also fell with Brent Crude lower by over 5% while futures were also pricing in declines when US equity markets open this afternoon. (Source: Bloomberg, ft.com)

UK Prime Minister Boris Johnson introduced the tightest social restrictions since March for South East England and warned that the new mutation of Covid-19 is up to 70% more transmissible. Many European countries banned travel from the UK on Sunday including Ireland which imposed a 48 hour travel ban. (Source: Bloomberg, Financial Times)

In better news for investors, following months of deadlock US lawmakers reached a deal on a new $900 billion stimulus package. The economic stimulus package includes more relief for small businesses and direct payments to American families. The direct payments for families where jobs have been lost due to the pandemic amount to $600 per individual, $1,200 per married couple and $600 per dependent child. The package also includes extra funds for the Supplemental Nutrition Assistance (food stamps), support for renters, schools and Universities. Extra funds to aid the distribution of Covid-19 vaccines are also included. (Source: Financial Times).

Last weeks’ initial jobless claims numbers (claims for unemployment assistance) showed that this stimulus injection was badly needed. Claims rose to 885,000 last week, the highest since early September. The importance of the package was also stressed by US Federal Reserve Chairman, Jay Powell in recent weeks, adding that it was vital to saving low income and minority households from being disproportionately affected by the pandemic. The deal still needs formal approval in the House of Representatives and Senate before being signed by President Trump. However, the agreement reached here between Democrats and Republicans means this should be a relatively straightforward process. (Source: Financial Times)

Best & Worst Performers of Large Cap US Stocks on Friday
Click image to enlarge

Global Market Update
(as at close of markets 18/12/2020)