Global equities started the year in the same bullish manner that drove markets to record highs at the end of 2020. European indices added another 2.0% throughout the first three weeks of the year, marginally outperforming the US, with financials and pharmaceuticals gaining as tech lagged. Investor sentiment continues to remain positive, with optimism for a strong rebound in the global economy in 2021 still high, as governments and central banks show little sign of scaling back their supportive rhetoric.
Risk markets were buoyed by the Democrats taking control of the Senate for the first time in six years, adding conviction to the President-elect’s ability to push through a more generous economic rescue package. Mr Biden now hopes that a Democrat-led Congress will be able to pass a new $1.9tn programme in order to support household spending, state and local governments and the unemployed. The US economy lost 140,000 jobs in December with the unemployment rate remaining stubbornly high at 6.7%. The package will see every American who earns less than $75,000, receive a one-off $2,000 payment. The confirmation of the blue sweep across The Capitol saw 10-year treasury yields rise from 0.91% at the start of the year to as high as 1.18%. The new package is set to come solely from new debt issuance which has put pressure on the US dollar with speculative bets against the dollar now building up to their highest level in nearly three years.
Read the whole note here
Disclaimer: The value of investments and any income from them can go down as well as up and investors may not receive back their original investment amount. This communication is for information purposes only. It is not intended as a personal recommendation of particular financial instruments or strategies and it does not provide individually tailored investment advice. This document provides the views of the London & Capital Investment Team examining the fundamental background, economic outlook and possible effect on asset markets. This document is not an invitation to subscribe and is by way of information only. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be solely relied on in making an investment or other decision. If you are considering investing, you should consult your London & Capital adviser. The views expressed herein are those at the time of publication and are subject to change. Correct at time of going to press.
London and Capital Asset Management Limited is authorised and regulated by the financial conduct authority, 12 Endeavour square, London, E20 1JN. Firm reference number 143286. Registered in England and wales, company number 02112588. © London and Capital Asset Management Limited. All rights reserved. London and Capital Wealth Advisers Limited is authorised and regulated by the UK Financial Conduct Authority (firm reference number 120776) and by the U.S. Securities and Exchange Commission of 100 F street, NE Washington, DC 20549, with sec firm reference number 801-63787. Registered in England and Wales, company number 02080604. © London and Capital Wealth Advisers Limited. All rights reserved.