Global Markets Update – Monday 11 January 2021

Moderna Vaccine

Global stocks notched the best weekly gains since last November.

The ‘blue wave’ trade picked up speed as the run-off election result in Georgia means the Democrats will control both the US Senate and the House of Representatives as of 20 January, ushering in an era of ramped up fiscal stimulus and infrastructure spending. Value stocks surged, while US bonds sold off.


The FTSE 100 jumped 6.4% over the week, buoyed by its sizeable weighting in the energy, banking, materials and industrials sectors, all of which were boosted by hopes of improving economic growth.

As Covid-19 cases continued to surge, despite a third national lockdown in England, the UK government announced it would undertake 2 million inoculations per week, with an aim to vaccinate more than 13 million of the over-70s and most vulnerable by mid-February.

Both the UK and EU approved Moderna’s Covid-19 vaccine.


The S&P 500 rallied 1.5% over the week, although all three major indices hit fresh highs. Banks, materials and energy shares led the advance as investors switched into value sectors ahead of an anticipated ‘blue wave’ of stimulus and spending.

The Democrats won both seats in the run-off elections for the two remaining Senate seats in Georgia. The news was overshadowed by events in Washington DC where a group of Trump supporters broke into the Capitol building, following an inflammatory speech by Donald Trump. They rampaged through the building, disrupting the rubber stamping of Joe Biden’s victory, although the ceremony later continued once the protestors had been cleared. However, the insurgence led to five fatalities and calls for President Trump to resign/be impeached/removed from office through the 25th Amendment. Trump has subsequently been banned from several social media platforms, including Twitter.

Non-farm payrolls shrank 140,000 in December, compared with an anticipated rise of 71,000. This marks the first monthly job loss since the start of the pandemic in the US in April. The unemployment rate was unchanged at 6.7%.

US drug wholesaler AmerisourceBergen bought Alliance Healthcare, the distribution business of Walgreens Boots Alliance, for $6.5 billion. The deal is designed to expand the company’s presence in Europe.


The FTSEurofirst 300 bounced 3.2% over the week.

Eurozone retail sales dropped 6.1% in November, reflecting tightening Covid-19 restrictions across the region.

Eurozone inflation came in at -0.3% in December, the fifth consecutive month that it has been negative.

Germany extended its lockdown measures, but manufacturing orders, industrial production, retail sales, employment and exports data for November and December were all better than expected, indicating the economy was resilient at the end of last year.


The Nikkei 225 rallied 2.5% over the week. The Topix closed at its highest point since early 2018.

Japan’s government declared a state of emergency in Tokyo and surrounding areas to counter a surge in coronavirus cases.

Pacific Basin

China’s CSI 300 index of big Shanghai and Shenzhen-listed stocks reached its highest level since 2008.

MSCI will drop three Chinese state-owned telecoms companies, China Mobile, China Telecom and China Unicom, from the MSCI China All Shares and MSCI ACWI following a Trump administration executive order barring investment in companies with alleged links to China’s military. Alibaba and Tencent were also hit by a report that the Trump administration could prevent US investment into the Chinese tech groups.


US Treasury yields rose as investors anticipated a deluge of US spending may lead to higher inflation. The yield on the 10-year US Treasury bond closed the week at 1.11%, the highest level in nearly 10 months, while the yield on the 10-year German Bund closed the week at -0.55%.

The 10-year US break-even rate, a key measure of inflation expectations, rise above 2.0% for the first time since late 2018.


Oil prices rallied. Brent crude breached $56 a barrel, closing the week with an 8% gain, its best weekly performance in four months.

Copper climbed to above $8,000 a tonne, its highest level since 2013, amid hopes that President-elect Biden’s plans for a green stimulus would increase its use in electric vehicle charging and wind turbines.

Image by Arek Socha from Pixabay