- The UK stock-market was higher this week. The week started by extending the previous week’s gains with investors aware of potential negatives including the spread of the South Africa coronavirus variant. Reports that Astrazeneca’s vaccine showed limited efficacy against mild disease caused by the virus caused some nerves, but these were eased midweek after the World Health Organization recommended the company’s vaccine for all adults. Some countries have been ruling out its use on those over sixty five based on previous data.
- The EU reached a deal with Pfizer and BioNTech for 300 million additional doses of their vaccine. According to ONS data released on Friday, UK GDP shrank by 9.9% in 2020, the largest annual fall on record. However, in the last quarter of the year it is estimated that GDP grew by 1.0%.
- The Bank of England kept interest rates at 0.1% on Thursday and left its bond-buying programme unchanged. The UK economy is expected to shrink by 4.2% in the first three months of 2021 and BofE said we should prepare for negative interest rates. Governor, Andrew Bailey, called the vaccine rollout “excellent news” and said “We do think that this is going to support a sustained recovery throughout the rest of the year”.
- The UK and EU are deadlocked over how the Brexit trade deal will be implemented. The major issue concerns trade, particularly regarding N. Ireland.
- Over the weekend the UK government hit its target of 15 million people receiving their first vaccination by 15th February. Boris Johnson described it as an “extraordinary feat” and it puts the UK rollout ahead of other European countries.
- Our Breadth indicator stayed positive and our Momentum Indicator ticked back up.
- At the end of the previous week sentiment was given a boost by the expectation that US President Joe Biden will soon deliver on his $1.9 trillion stimulus package and the Senate and the House both passed a budget resolution that will allow the proposal to be passed in the Senate on a simple majority. Details of the proposed package were announced and includes $1,400 direct payments to Americans. Progress of the bill will be closely monitored.
- Investors were focused on earnings reports and among the S&P 500 stocks, 80% of the companies reporting so far have beaten their earnings estimates.
- US Fed Chairman Jerome Powell said Wednesday that the central bank will be “patiently accommodative” and that employment is “a long way” from where it needs to be. The Fed is unlikely to “even think about withdrawing policy support” in the near term.
- The first conversation between Joe Biden and Chinese leader Xi Jinping took place on Wednesday. The US President raised his concerns about China’s “coercive and unfair economic practices” and human rights violations.
- Former President Donald Trump was acquitted of incitement of insurrection. Senator Lindsay Graham said the Trump movement is alive and well.
- Both our Market Breadth Indicator and our Price Momentum Indicator remained positive.
The Big Picture 12th February 2021
Market Sentiment 12th February 2021
U.S. Risk Barometer 12th February 2021
Europe Risk Barometer 12th February 2021
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