Weekly Market Insight

Latest Economic & Market Update 7th January 2021

07th January 2021

Good afternoon, it is January 7th 2021 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Housing Minister concerned construction closure will impact delivery targets
  • Democratic win deciding Senate seats, cyclical equities rise on stimulus hopes

The Cabinet decided on Wednesday that non-essential construction will stop at 6pm this Friday in order to help prevent the further spread of Covid-19. Social housing projects that are deemed as essential construction by local authorities are exempt from the closure. However, the temporary industry wind down is likely to have an impact on government housing targets this year. Darragh O’Brien, Minister for Housing, stated: “This will undoubtedly have an impact on our housing delivery targets for 2021, however, the Government and my Department will do whatever is necessary to make up as much ground as possible as restrictions ease and people get back to work”. Under the €3.3 billion housing budget for 2021, the Government is targeting 12,750 social housing units: 9,500 new-build social homes and 3,250 lease & acquire social homes. BlackBee aims to provide the latter category to the country’s available social housing stock via a refit and refurbishment of already built homes. This will provide supply levels for the government to meet the 3,250 lease & acquire social home target. Should the number of new builds available be reduced due to this construction lockdown, BlackBee believes that its strategy will see increased demand from the government to enter into long term housing leases. (Source: gov.ie)

The Democratic Party won the two decisive seats in the Georgia Senate runoff on Wednesday. The US Senate is now split evenly with 50 seats for both the Democratic and Republican parties. However, US Vice President-Elect Kamala Harris, a Democrat, has the decisive tie-breaking vote allowing her and Joe Biden’s party control of the Senate as well as the House of Representatives. This is likely to pave the way for further fiscal stimulus which will support those worst hit financially by the Covid-19 pandemic and ignite economic growth. As a result, the S&P 500 rose 0.6%, primarily driven by a rally in shares of companies in cyclical industries and small-caps. The tech-heavy NASDAQ Composite closed the day 0.6% lower amid investor concerns of the possible introduction of profit harming corporate taxes and regulations. US government bonds sold off which saw the 10-year Treasury note rise 7 basis points and breach the 1% yield, its highest level since March. (Source: FT, Bloomberg)

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

Global Market Update
(as at close of markets 06/01/2021)