Equity markets bounced back this week, as a combination of factors eased fears as to the likely impact of the Omicron covid variant. Data out of South Africa continued to suggest that the variant induces less serious illness versus previous covid strains, whilst Pfizer/BioNTech said that early trials show that a third vaccine booster shot is effective against Omicron. Despite this, whilst there remains some doubt as to the impact of the Omicron variant, some countries have tightened restrictions, with a corresponding impact on businesses, particularly within the leisure sector, leading to renewed weakness in markets towards the end of the week. All eyes are on the release of US inflation data later today, with expectations that inflation will have risen to 6.8% year-on-year in November, whilst weekly filings for unemployment benefits fell to 184,000 in the week to the 4th of December, the lowest level since 1969.
As of 12pm on Friday, London time, US equities rose 2.8%, having been within just 0.1% of their all-time high mid-week. Similarly, US technology stocks bounced by 2.9%. European stocks increased by 2.9% and UK equities rose 2.6%, however, sterling fell to USD 1.32, its lowest level in over a year. Japanese equities increased by 0.9%, Australian stocks were up by 1.6% and Emerging markets climbed 1.9%.
Government bonds gave back some of their near-term gains, with the yield on the 10-year US Treasury, which moves inversely to price, rising to 1.51%. There was a smaller move in German bunds and UK gilts, but nonetheless, prices fell, with yields now standing at -0.34% and 0.78% respectively.
There was a strong rally in crude oil prices, with Brent climbing by 7.5% to $75.1 a barrel and US WTI (West Texas Intermediate) rising by 8.2% to $71.7. Iron ore also increased by 6.5%, whilst copper, which has barely been troubled by concerns over Omicron in recent weeks, increased by 1.7% to $9,540 a tonne. Gold is now trading at $1,772 an ounce, a fall of 0.6% over the week.
The world’s most indebted property developer, Chinese company Evergrande, defaulted this week as it missed a coupon payment on Monday, having failed to pay $82.5m to investors. Subsequently, the rating agency Fitch downgraded the company to “restricted default”. Although investors were reminded that it is far from the only Chinese property company in a precarious position, as Kaisa also failed to repay a $400m bond that matured on Tuesday. On Monday, the People’s Bank of China, unleashed $188bn of liquidity into the financial system in order to limit the risk of contagion.
Your message (optional)
Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here
In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Financial Services Contracts Regime, which allows EEA-based firms to operate in the UK for a limited period to carry on activities which are necessary for the performance of pre-existing contracts, are available on the Financial Conduct Authority’s website.
Copyright 2020 Lawsons Equity Ltd | Designed by Echo
Disclaimer: The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice. Similarly, any views or options expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Lawsons Equity Limited has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Lawsons Equity Limited does not accept liability for losses suffered by persons as a result of information, views of opinions appearing on this website. This website is owned and operated by Lawsons Equity Limited.