Global stocks gained on further good news on the vaccine front. Oxford University and AstraZeneca announced that their vaccine had between 62% and 90% efficacy, depending on dosage. In addition, fears of a less-than-smooth presidential handover in the US were smoothed when Donald Trump agreed to let the transition process begin – although he has yet to concede defeat.
The FTSE 100 gained 0.3% over the week, bringing its rally so far over November around 15% – the strongest monthly rally on record. The UK index has benefitted from its high concentration of businesses that will likely benefit from a global recovery, such as oil producers, miners and banks.
Talks between the UK and the EU about a future trade relationship remained deadlocked.
England will return to a three-tier system once the current lockdown ends on 3 December. Most of the country will be in the two highest tiers, where indoor socialising is prohibited, with only the Isle of Wight, Cornwall and the Isle of Scilly in the lowest tier. The prime minister faced a bank-bench revolt on the wider use of tier 2 restrictions, with ministers saying the measures will be in place until the spring.
UK Chancellor Rishi Sunak announced his latest spending review in which he forecast that the UK economy would shrink 11.2% in 2020 and would not return to its pre-pandemic size until the end of 2022.
The flash estimate of November’s IHS Markit purchasing managers’ index for the services sector fell to 45.8, from 51.4 in October. However, the data was better than many analysts had expected as England entered its second lockdown during the month.
The UK will stop using the RPI measure of inflation in 2030. The move will cut pay-outs to some DB pensioners and holders of index-linked gilts, but will reduce price rises for rail tickets, student loan repayments and some mobile phone contracts.
The S&P 500 rallied 2.2% over the week, although markets were shut on Thursday for Thanksgiving. So far this month, investors have rotated into industries that are set to benefit most from an economic recovery, with the energy and financials sectors leading gains.
US stocks touched fresh record highs after Donald Trump allowed the General Services Administration to begin the presidential transition. The decision followed news that Georgia, Michigan and Pennsylvania had certified their election results, dismissing attempts by Trump’s lawyers to halt the process.
President-elect Joe Biden appointed Janet Yellen as his Treasury Secretary. The former Federal Reserve chair is widely respected for her experience in labour economics.
Ahead of the Thanksgiving break, a time when it is traditional for family to gather together, the US reported the highest daily Covid-19 death toll since early May. New daily cases in Texas and California hit record highs while New York reported more than 6,000 coronavirus cases in a single day for the first time in seven months.
US first-time unemployment claims unexpectedly rose for the second week in a row.
US personal incomes fell 0.7% over the month of October. Consumer spending rose 0.5% in October. While this was the sixth straight monthly increase, momentum is slowing due to the re-imposition of restrictions amid growing coronavirus cases.
The University of Michigan consumer sentiment index was revised lower to 76.9 in November of 2020 from a preliminary of 77 and below 81.8 in October.
The FTSEurofirst 300 rose 0.9% over the week. The index is on track for a monthly gain of around 14%, the strongest monthly rise on record as investors rotate into previously out-of-favour value stocks.
The European Central Bank is widely expected to expand its €1.35tn emergency bond-buying programme in December’s policy meeting. Minutes from the ECB’s October meeting, published on Thursday, confirmed policymakers’ concern about a weakening outlook, saying that risks to the economy are “clearly tilted to the downside”. The ECB also signalled that eurozone banks will be allowed to pay dividends again from next year if they convince supervisors that their balance sheets are strong enough to survive the economic and financial fallout from the coronavirus pandemic.
German chancellor Angela Merkel said that the nation’s partial lockdown would last until at least December 20 and might be extended into January.
The flash eurozone IHS Markit composite purchasing managers’ index fell to a weaker-than-expected 45.1 in November, compared to 50.0 in October. The reading is the lowest in six months and is the first time the index has entered contraction territory since June. Services sector activity fell to 41.3 from 46.9 in October, which is the lowest level since this spring’s lockdowns. However, manufacturing activity remained in expansion territory, although it declined to 53.6, down from 54.8 in the previous month.
Germany’s blue-chip Xetra Dax Index will expand from 30 to 40 members and apply tougher qualification criteria in the wake of the Wirecard scandal.
The Ifo Institute’s index of German business confidence fell to 90.7 in November, from 92.5 in October. This is the second consecutive monthly decline as Germany faces rising Covid-19 cases and restrictions.
The European Commission’s eurozone economic sentiment index fell to 87.6 in November from 91.1 in October.
French tax authorities have begun demanding millions of euros from US technology groups as they push ahead with a new digital services tax.
Sweden’s central bank announced that it would boost the size of its asset purchases and extend the quantitative easing programme into 2021 in order to “give further support in an uncertain time and improve the conditions for a recovery”.
The Nikkei 225 surged 4.4% over a holiday shortened week. The Topix index rose to its highest level in two years.
Shares of Asian makers of protective and medical gear have underperformed following the announcement of three effective Covid-19 vaccines.
China’s industrial profits surged 28.2% year-on-year in October.
India’s economy shrank 7.3% year-on-year in the third quarter. While the outcome was better than had been expected, the data plunges the country into a technical recession as GDP also contracted in the second quarter.
The yield on the 10-year US Treasury bond closed the week at 0.85%, while the 10-year German Bund yield ended at -0.59%. Portugal’s 10-year bond yield fell below zero for the first time, on expectations of further asset purchases by the European Central Bank.
CCC-rated bonds, the lowest grade of the US high-yield bond market, have rallied 7% so far in November, the biggest jump in more than four years. Meanwhile, European high-yield bonds have also recorded their best monthly performance since April.
The Chinese corporate bond market has suffered a spate of defaults in supposedly SOEs. These included automotive group Huachen, Yongcheng Coal and Electricity and Tsinghua Unigroup, a high-profile state technology group.
Brent crude broke through $48 a barrel, its highest level since March. However, gold retreated to below £1,800 an ounce, its lowest level since July.
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